Family involvement signals in Initial Public Offerings

Jeffrey Chandler, Gregory Payne, Curt Moore, K. H. Brigham

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


Utilizing signaling theory, this study examines the relationship between signals of family involvement (i.e., family ownership and management) and the performance of firms undergoing an initial public offering (IPO). Specifically, we argue that firms using family-oriented language in their IPO prospectus results in greater IPO underpricing due to the misalignment between IPO investors’ general perceptions of family business and their expectations for the IPO. Additionally, we argue that this misalignment is more pronounced for firms in high-tech industries, which are commonly more risk- and growth-oriented. Using a sample of 155 U.S.-based firms that made their IPO between 2009 and 2012, we find support for our hypotheses. Overall, our findings demonstrate that more observable signals of family involvement in an IPO may negatively influence IPO performance, particularly in high-tech industries.

Original languageEnglish
Pages (from-to)8-16
Number of pages9
JournalJournal of Family Business Strategy
Issue number1
StatePublished - Mar 2019


  • Content analysis
  • Family involvement signals
  • High-tech firms
  • Initial public offering
  • Signaling theory
  • Underpricing


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