TY - JOUR
T1 - Family involvement signals in Initial Public Offerings
AU - Chandler, Jeffrey
AU - Payne, Gregory
AU - Moore, Curt
AU - Brigham, K. H.
N1 - Publisher Copyright:
© 2019 Elsevier Ltd
PY - 2019/3
Y1 - 2019/3
N2 - 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.
AB - 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.
KW - Content analysis
KW - Family involvement signals
KW - High-tech firms
KW - Initial public offering
KW - Signaling theory
KW - Underpricing
UR - http://www.scopus.com/inward/record.url?scp=85061835029&partnerID=8YFLogxK
U2 - 10.1016/j.jfbs.2019.01.004
DO - 10.1016/j.jfbs.2019.01.004
M3 - Article
VL - 10
SP - 8
EP - 16
JO - Journal of Family Business Strategy
JF - Journal of Family Business Strategy
IS - 1
ER -