This paper tests the relationship between ownership/leadership structures and stock returns for firms listed in Taiwan. A "Governance Index" is built based on four different aspects of the company's governance structure: 1. CEO duality, 2. Size of the board of directors, 3. Managements' holdings and 4. Block shareholders' holding. This index is used as a proxy measure of the effectiveness of the corporate governance mechanism. We propose that firms under good governance should outperform those under poor governance. We find a striking relationship between our governance index and stock performance of firms. The results imply that our corporate governance index is successful in evaluating the effectiveness of the governance mechanism of firms in Taiwan. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

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It has been proven by Ljungqvist and Wilhelm (2002) that constraints on underwriters' allocation discretion reduce price revisions. The dual-tranche of IPO bookbuilding in Taiwan and Hong Kong impose more regulatory constraints limiting underwriters than U.S. bookbuilding does, but price revisions of Taiwan and Hong Kong IPOs are significantly higher than those in the U.S. This is due not to increased information production but to the price discovery inefficiency in primary markets.