When the going gets tough: board capital and survival of new economy IPO firms
This study investigates the influence of corporate governance attributes on thelikelihood of survival for 127 new economy IPO companies that listed on the ASXbetween 1994 to 2002. We use survival analysis techniques utilizing the Cox proportionalhazards model with three main categories of corporate governance attributes; a) board size,b) board independence and c) ownership concentration We find that the survival time isnegatively related to the percentage holdings of the top 20 shareholders. Our results alsosuggest that new economy IPO companies with low leverage and small company size aremore likely to survive. However, the results indicate that board size and boardindependence do not explain the survival likelihood of new economy IPO firms. Ourresults suggest that corporate governance mechanisms that are designed specifically toprotect minority shareholders and other providers of external capital are of little valueduring periods of extreme financial duress.
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