Session 164

IPOs

Track K

Date: Tuesday, October 9, 2012

 

Time: 08:00 – 09:15

Paper

Room: Dressing Room 220


Session Chair:

  • Shih-Chi Chiu, Nanyang Technological University

Title: Keeping Control in Newly Public Firms: Implications on Performance, Capital Structure and Dividend Policy

Authors

  • Asma Fattoum, Copenhagen Business School
  • Frédéric Delmar, Lund University

Abstract: While an IPO provides firms valuable resources, it jeopardizes incumbent shareholders’ control over the firm. To prevent loss of control, defensive mechanisms are implemented. This paper examines whether some types of controlling shareholders are more likely to use defensive mechanisms than other shareholders and assesses the implications of defensive mechanisms on firm performance, capital structure and dividend policy at the IPO and post-IPO. We suggest that firms controlled by founder-CEOs are more likely to implement defensive mechanisms at the IPO than other firms. We also suggest that founder-CEOs’ use of defensive mechanisms generates negative effects on firm valuation at the IPO (underpricing) and post-IPO and leads to lower debt and dividend payout. Our hypotheses are tested in the context of French IPOs between 1992-2010.

Title: Socioemotional Wealth and IPO Underpricing of Family Firms

Authors

  • Max Leitterstorf, WHU - Otto Beisheim School of Management
  • Sabine Rau, King's College London

Abstract: This paper compares the IPO underpricing of family and non family firms using a sample of 153 German IPOs. Based on the concept of socioemotional wealth (SEW) we argue that family firms willingly choose higher IPO underpricing than non family firms in order to preserve their SEW. The relationship between family firm status and underpricing is positively moderated by valuation uncertainty of the firm. Our empirical results support our hypothesis.

Title: Venture Capital-Backed IPOs: Why do some Venture Capitalists Cash Out while Others Retain Their Stakes?

Authors

  • Maximilian Schmidt, Technical University of Munich
  • Ann-Kristin Achleitner, Technical University of Munich
  • Carolin Bock, Technical University of Munich

Abstract: With this paper we address the phenomenon of full and partial exits of venture capital (VC)-backed IPOs. This study investigates the determinants of full and partial exits. Thereby, we hypothesize that investment characteristics, funds-related variables, and market conditions have significant influence. We use a proprietary data set including 352 venture capital-backed IPOs in the United States from 1984 to 2008. Our results approve the hypotheses insofar that VC firms tend to retain their investment to add further value to the portfolio company and wait for superior market conditions. VC firms are more likely to fully exit an investment in the aftermaths of an IPO, when their funds approach their termination date and when VCs are in the need of building a track record.

Title: When Intent Matters: The Contingent Effects of Government Ties on IPO Performance

Authors

  • Asda Chintakananda, National Institute of Development Administration
  • Eugene Kang, Nanyang Technological University
  • Shih-Chi Chiu, Nanyang Technological University
  • David Gomulya, Nanyang Technological University

Abstract: This paper investigates the contingent value of ties with prominent entities at the time of a firm’s initial public offering (IPO). Existing research suggests that government ties can bring about positive signals through endorsement and legitimacy resulting in a stronger IPO performance; yet empirical evidence at the IPO stage has shown otherwise. This research use signaling theory to suggest that the intent of the government in developing ties can be categorized into individual investments and collective investments which bring about positive and negative effects towards IPO performance respectively. In addition, these effects are moderated by whether government ownerships are also part of the firm directorship.

All Sessions in Track K...

Sun: 08:00 – 09:15
Session 126: Entrepreneurship & Stakeholders - The Future Research Agenda
Sun: 09:30 – 10:45
Session 127: Teaching Strategic Entrepreneurship
Sun: 11:15 – 12:30
Session 128: Poverty, Informal Firms & Strategic Entrepreneurship
Sun: 15:15 – 16:30
Session 157: Financing Entrepreneurial Ventures
Session 161: Entrepreneurial Growth
Mon: 08:00 – 09:15
Session 158: Corporate Venture Capital
Session 175: Austrian Economics & Creative Destruction
Mon: 09:30 – 10:45
Session 178: Institutional Theory & New Ventures
Session 180: Pushing the Bounds of Agency Theory
Mon: 13:30 – 14:45
Session 159: Exploration, Exploitation, and Ambidexterity
Session 169: Spinoffs, Spinouts, and Labor Mobility
Mon: 16:30 – 17:45
Session 162: New Venture Strategy & Innovation
Session 163: Cognitive Perspectives
Tue: 08:00 – 09:15
Session 164: IPOs
Session 170: Emerging Markets
Tue: 11:00 – 12:15
Session 160: Corporate Venturing and Intrapreneurship
Session 179: Social Networks within and across Firms
Tue: 14:15 – 15:30
Session 166: Institutional Aspects of Entrepreneurship
Session 167: Firm Boundaries
Tue: 15:45 – 17:00
Session 174: Social Networks & Entrepreneurship
Session 176: Value Capture & Appropriability
Tue: 17:30 – 18:45
Session 168: Uncertainty, Ambiguity, and Sense-Making
Session 173: New Venture Creation


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