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The University of Southampton
Centre for Risk Research

Professor explains how gender influences risk management and IPO pricing

Published: 3 January 2017
Professor Paul McGuinness

Professor Paul McGuinness from the Chinese University of Hong Kong recently delivered a Centre for Risk Research (CRR) seminar in which he explained how the gender composition of top management influences risk management and share pricing in Initial Public Offerings (IPOs).

In the last CRR seminar of 2016, Professor McGuinness presented his research assessing the importance of female presence within the top-management teams (TMTs) of firms administering IPOs in Hong Kong. He first explained that for a vast majority of these firms, TMTs and the board of directors often have radically different roles; TMTs often take full responsibility for firm performance while the directors primarily focus on developing and maintaining vital relationships between the firm and China's political elite. Hence, women in the TMTs have the potential to significantly influence firm performance and, therefore, the price of IPOs.

Professor McGuinness found that female managerial presence is often greater in firms with younger TMTs and in entities with fewer employees. He also found that board gender exhibits little to no association with underwriter quality and concluded that senior managers yield micro-level resource dependencies well beyond those on offer from directors. Moreover, gender diversity had only a limited connection with IPO under-pricing. Most notably, he found that female managers broaden firm networks and channels to achieve higher valuation multiples and, thus, more capital funding.

The seminar was well attended by staff and post-graduate students from Southampton Business School. The fascinating insights revealed by Professor McGuinness's research led to a wealth of questions and a lively discussion on the role of gender diversity in organisational management.

Details of the 2017 CRR seminars will soon be published on the CRR 'News, Events & Seminars' webpage.

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