Chief executive officer power and initial public offering underpricing: Examining the influence of demand‐side cultural power distance

ABSTRACT: We examine the relation between shareholder investment horizon and chief executive officer (CEO) horizon incentives derived from compensation contracts. We find that influential incumbent shareholders provide managers with short-horizon incentives to maximize current firm value when these shareholders plan to sell their stock. Specifically, we use the initial public offering (IPO) setting in which venture capitalists (VCs) represent short-horizon, controlling investors with strong selling incentives after the IPO. We predict and find that VCs' short-term incentives influence CEO's annual horizon incentives following the IPO. At the same time, institutional monitoring limits the influence of VCs on annual, short-horizon incentives. To preempt this disciplining by market participants, VCs grant equity prior to the IPO that correspond with their short-horizons and result in shorter portfolio horizon incentives for the CEO after the IPO. We also document a positive relation between long-run abnormal stock returns and horizon incentives, consistent with horizon incentives influencing management actions. Data Availability: All data are publicly available from the sources indicated in the paper.

Download Full-text

CHIEF EXECUTIVE OFFICER (CEO) POWER, CEO KELUARGA, DAN NILAI IPO PREMIUM PERUSAHAAN KELUARGA DI INDONESIA

Jurnal Akuntansi ◽

10.24912/ja.v21i2.196 ◽

2017 ◽

Vol 21 (2) ◽

pp. 219

Author(s):

I Made Sudana ◽

Ni Putu Nina Aristina

Keyword(s):

Initial Public Offering ◽

Capital Market ◽

Family Firms ◽

Investment Decision ◽

Chief Executive ◽

Ceo Power ◽

Ceo Tenure ◽

Public Offering ◽

Voting Right

The development of family firms led to increase the funding requirement for expansion. Family firms can obtain funds from capital market by doing initial public offering (IPO). The aims of this research is to know the influence of CEO power using proxy of CEO voting right, CEO tenure, and CEO interlock on IPO premium, and the influence of family CEO on IPO premium. This research uses 65 samples of family firm in Indonesia during 2001-2014. The result of multiple regression showed that CEO voting right, CEO interlock, and family CEO are positive significantly affect IPO premium. This finding reveal that when investors make investment decision on IPO’s firms, they will evaluate the quality of firm’s CEO. Also, the presence of family CEO increase investor’s valuation on company shares that increase IPO premium.

Download Full-text

Why do travel agencies choose to undergo IPOs in Taiwan?

Tourism Economics ◽

10.1177/1354816617725452 ◽

2017 ◽

Vol 24 (1) ◽

pp. 79-91 ◽

Cited By ~ 1

Author(s):

Leo Huang ◽

Michael Chang

Keyword(s):

Initial Public Offering ◽

Chief Executive Officers ◽

Qualitative Interviews ◽

Chief Executive ◽

Travel Agency ◽

Strategy Model ◽

Travel Agencies ◽

Public Offering ◽

Executive Officers ◽

Delphi Research

Travel agencies have seen an increasing number of firms going public in recent years. This study explores and empirically examines the initial public offering (IPO) strategy model for travel agencies by adopting a three-round Delphi research design. Qualitative interviews with the 13 travel agency chief executive officers and related experts provided additional insights. The result shows that Taiwanese travel agencies consider 9 internal motivations, 8 external environment forces, and 11 determinants for the decision to go IPO and 10 performance indicators post-IPO. Finally, the model herein illustrates how travel agencies can realize IPOs’ strategic goals by increasing the performance of travel agency post-IPO.

Download Full-text

Who does the media love? A qualitative content analysis of the narratives of founders and nonfounders in IPO firms

Baltic Journal of Management ◽

10.1108/bjm-07-2020-0268 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Christina H. Tupper

Keyword(s):

Initial Public Offering ◽

Chief Executive Officers ◽

Qualitative Content Analysis ◽

Chief Executive ◽

Content Type ◽

Performance Variables ◽

Organizational Narrative ◽

The Media ◽

Public Offering ◽

Executive Officers

PurposeResearchers have investigated the distinctions between founder and nonfounder chief executive officers (CEOs) for different performance variables. Researchers have also investigated the use of media as supplemental information that investors review to make decisions about initial public offering (IPO) firms. Research that investigates founders and nonfounder CEOs of IPO firms in the media is limited but growing. This paper aims to explore how founder and nonfounder CEOs' narratives are portrayed differently in business media following an IPO.Design/methodology/approachUsing insights from the narrative paradigm, 1,057 news paragraphs about CEOs from 19 matched pairs (38 firms) were content analyzed using a contrasting coding strategy.FindingsFounders and nonfounders' narratives differ in three ways. Specifically, founder CEOs are more likely to (1) have their personal background detailed in the media, (2) translate technical business information to easy-to-understand general language and (3) be quoted talking about positive information than nonfounder CEOs.Research limitations/implicationsThe results of this study show the media's role in creating narratives about management and how the experiences of founders and nonfounders are represented differently in the media. The study is limited by only investigating media articles about CEOs and not investigating the entire organizational narrative.Originality/valueThis study adds to the growing literature that investigates the role the media plays in portraying management in the media at time of IPO.

Download Full-text