Impact of Internal Governance Mechanisms on the Initial Returns during the Listing Period

The application of simultaneous equation regressions on a sample of 110 FrenchIPO firms between 2005-2010, allowed us to say that the initial return issignificantly influenced by the under / overpricing. The results of our studyshow that the underpricing can improve the initial return. On the other hand, thisreturn is affected negatively and significatively by the overpricing. Thus, wehave shown that the governance structure is a major determinant of initialreturns, observed in the listing period. Our work shows that there is a verysignificant relation between the overpricing and the internal governancemechanisms. Nevertheless, the impact of these mechanisms on the underpricingis poorly recorded.