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• Dr. Sam Garg
  Assistant Professor
  Department of Management
  The Hong Kong University of Science and Technology

An initial public offering (IPO) ushers in many changes to the entrepreneurial firm’s boards of directors. This paper shows that higher board undervaluation at IPO, defined as the extent to which the overall board leadership appointments cannot be explained by normatively accepted criteria, is associated with higher board turnover levels, and with lower qualifications among new directors in the subsequent years. Further, the effect of board undervaluation on firm performance is mediated both by director turnover and new directors’ qualifications. But these two mediators operate as opposing forces on performance—director turnover levels are associated with lower firm performance, but lower new-director-qualifications are associated with higher performance.