On the left-hand side, we have offer size, underwriter reputation, underwriting spread, other offering-related expenses, and SEO discount as dependent variables, while on the right-hand side, we have the vector of explanatory variables X, which includes management quality variables TSIZE, PMBA, PCPA, PFTEAM, CORE, TENURE, TENHET, FCEO, and BOARDS, as well as firm size, firm age, and the number of outside directors as control variables.
In particular, we find that firms with larger management teams (TSIZE), higher percentages of CPAs (PCPA), and more dominant CEOs (FCEO) have significantly larger offer sizes.
In particular, firms with larger (TSIZE), more heterogeneous (TENHET), and CEO-dominated (FCEO) management teams, as well as those with higher percentages of CPAs (PCPA) and managers in core functional areas (CORE) incur lower underwriting spreads.
In particular, SEOs of firms with more dominant CEOs (FCEO) are associated with smaller SEO discounts.
Panels B and C of Table V report the results of our estimation of the SUR system (1) with only one selected management quality proxy (TSIZE, CORE, TENHET, and FCEO in each case) as an independent variable in addition to the control variables.
Management team members of SEO firms also have significantly longer average tenures (TENURE) and more dominating CEOs (FCEO).
The coefficient estimate of TSF score is not statistically significant (driven by the fact that FCEO has a significantly positive influence on the number of analysts following the firm whereas TENHET influences it negatively).
Other management quality variables that were consistent with our predictions and had a significant impact on a firm's SEO characteristics were FCEO, TENHET, and PCPA (e.g., FCEO had a significant effect on offer size, underwriting spread, and the SEO discount).