Does CEO Really Matter?: A Study on the Effect of CEO Characteristics and External Environmental Factor on Initial IPO Performance

This study examines the determinants of initial IPO stock performance. While previous studies focus on financial factors, this study focuses on non-financial factors. For non-financial factors, we consider CEO characteristics as most important factor of internal environmental factors of firm. As external environmental factors of firm, IPO subscription rates for institutional investors and private investors was examined. Using data on 208 Korean firms that went public during the years 2009 to 2011, we empirically tested how the internal and external environmental factors affect initial IPO performance. In contrast to previous studies, our study found that CEO characteristics have no significant effect on initial IPO performance. For external environmental factors, there is a positive relationship between IPO subscription rates for institutional investors and private investors and IPO firm performance. Furthermore, additional analysis show that some of CEO characteristics variables have an effect on initial IPO performance by interacting IPO subscription rates for institutional investors and private investors. This study considers the initial IPO performance that was not focused on previous studies, and empirically examines the effect of internal and external non-financial factors of organization.