Abstract

This study investigates the impact of management quality on the operating performance of Canadian IPO's. Several dimensions of management quality are explored, including: the average tenure of management team members, the heterogeneity of tenures of team members, the size of the top management team, the number of outside directors, the educational and professional credentials of managers, the CEO dominance of the team, the past industry-specific experience of team members, and the presence of the founder in the management team. Operating performance is positively associated with the management team's tenure, size, and the team's inclusion of chartered accountants. Heterogeneous membership tenure, as well as the presence of dominant CEO's and MBAs on the top management team are negatively related to performance. Some evidence of earnings management by managers in the sample is also observed. Finally, equity retention of directors and officers following the IPO has some explanatory power on the firm's value.