British IPO directors, 1891-1911

Abstract

Company directors in Victorian Britain have a somewhat dubious reputation. There are claims that directors had little business experience with the directorships obtained mainly via social connections. However, a little experience goes a long way, and boards with experienced directors can place their securities in an initial public offering (IPO) at better prices and can obtain more dispersed ownership than inexperienced boards. We find evidence of network effects – directors attracted investors from firms they had previously floated. These beneficial effects of experience are appreciated by the market; experienced directors are more likely to obtain future positions on IPO boards.