Board Characteristics of Australian IPOs: An analysis in Light of the ASX Best Practice Recommendations

Abstract

Australian Stock Exchange recommendations on corporate governance include a highly detailed model of board structure and composition that is ostensibly “best practice”. We find that small IPO companies with relatively short operating histories have board characteristics that diverge substantially from the ASX recommendations, notwithstanding their strong incentives to adopt corporate governance measures that maximise their appeal to investors. Our findings lend support to the view that the ASX recommendations on corporate governance are excessively prescriptive and unduly costly for small companies in particular.