Title: Family involvement signals in initial public offerings
Abstract: 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.
Publication Year: 2019
Publication Date: 2019-03-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 17
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot