Board Governance and Underpricing: Evidence From Five Capital Markets in Southeast Asia

This study examines and analyzes the board governance factors associated with the underpricing of companies issuing stocks in the capital market initially. The factors considered are the size of the supervisory board, gender-based board diversity, and the size of the audit committee. The population comprises underpricing corporations in the capital markets of Indonesia, Malaysia, Singapore, Thailand, and the Philippines between 2018 and 2022, sampled using a stratified random sampling technique. Furthermore, 208 companies are employed as samples, based on the calculation of the Isaac and Michael formula. Then, the regression model is used to analyze the data. As a result, this study reveals that the greater the size of the supervisory board and the audit committee, the less underpricing, and the greater the representation of women on the supervisory board, the greater the underpricing. Reinforced by these findings, this study recommends that firms have numerous supervisory boards, comprising seven to twelve people, a high ratio of male supervisory board members, and more audit committee members to mitigate underpricing, which is a non-optimal effort to raise new capital from the initial public offering. As a novelty, this study utilizes companies from five capital markets in Southeast Asia; therefore, the generalizability of this study can be more extensive than that of employing a single capital market.