IPO Price Formation and Board Gender Diversity

IPO Price Formation and Board Gender Diversity

P. Raghavendra Rau, Jason Sandvik, Theo Vermaelen

Series number :

Serial Number: 

Date posted :

May 10 2021

Last revised :

March 05 2023
SSRN Share


  • Initial Public Offerings • 
  • Information Processing • 
  • Going Public Process • 
  • Gender Diversity • 
  • underpricing • 
  • Investment Banks • 
  • Corporate governance • 
  • Network Centrality

We study the relation between board gender diversity and initial public offering (IPO) price formation. We find that IPOs experience significantly greater underpricing when the firm’s board has at least one female director on it, relative to when no women sit on the board.

The underpricing effect is not attributable to differences in profitability, growth opportunities, CSR scores, CEO gender, director experience, or other firm, director, or underwriter characteristics. Instead, the underpricing effect appears to be driven by increased non-pecuniary institutional investor demand for board gender diversity over the most recent decade. Board gender diversity does not impact the initial file price of the IPO or the offer price adjustment, suggesting that institutional investors who are not invited to participate in the IPO book-building process are likely driving the underpricing effect. We find that the underpricing effect is attenuated for IPOs with underwriters that have relatively greater network centrality.


Real name:
P. Raghavendra Rau
Real name:
Jason Sandvik