The impact of different forms of IPO firm legitimacy on the choice of alliance governance structure

2012 ◽  
Vol 18 (4) ◽  
pp. 516-536 ◽  
Author(s):  
Joseph E Coombs ◽  
Paul E Bierly ◽  
Scott Gallagher
Keyword(s):  
Initial Public Offering ◽  
Joint Venture ◽  
Local Community ◽  
Governance Structure ◽  
Business Press ◽  
Biotechnology Firms ◽  
Hierarchical Governance ◽  
Public Offering ◽  
The Impact ◽  
Alliance Governance

AbstractWe analyze the effects of four different types of firm legitimacy – managerial, technological, local community legitimacy and business press endorsement – on the choice of alliance governance structure in partnerships with newly public biotechnology firms. We expand current research to differentiate between non-equity, minority equity and joint venture alliance structures. We find that initial public offering of stock (IPO) firms with higher levels of managerial legitimacy and local community legitimacy are more likely to enter into joint ventures than minority equity alliances and non-equity alliances. IPO firms with higher technological legitimacy and business press endorsement are more likely to use a less hierarchical governance structure.

The impact of different forms of IPO firm legitimacy on the choice of alliance governance structure

2012 ◽  
Vol 18 (4) ◽  
pp. 516-536 ◽  
Author(s):  
Joseph E Coombs ◽  
Paul E Bierly ◽  
Scott Gallagher
Keyword(s):  
Initial Public Offering ◽  
Joint Venture ◽  
Local Community ◽  
Governance Structure ◽  
Business Press ◽  
Biotechnology Firms ◽  
Hierarchical Governance ◽  
Public Offering ◽  
The Impact ◽  
Alliance Governance

AbstractWe analyze the effects of four different types of firm legitimacy – managerial, technological, local community legitimacy and business press endorsement – on the choice of alliance governance structure in partnerships with newly public biotechnology firms. We expand current research to differentiate between non-equity, minority equity and joint venture alliance structures. We find that initial public offering of stock (IPO) firms with higher levels of managerial legitimacy and local community legitimacy are more likely to enter into joint ventures than minority equity alliances and non-equity alliances. IPO firms with higher technological legitimacy and business press endorsement are more likely to use a less hierarchical governance structure.

scholarly journals Choice between Acquisition and Joint Venture Based on Financial Statement Comparability

2021 ◽  
Vol 13 (11) ◽  
pp. 6218
Author(s):  
Heein Yi ◽  
Sangsoo Kim ◽  
SeungHun Han
Keyword(s):  
Information Asymmetry ◽  
Initial Public Offering ◽  
Joint Venture ◽  
Investment Strategy ◽  
Financial Statement ◽  
Experimental Setting ◽  
Target Firms ◽  
Public Offering ◽  
Accounting Comparability ◽  
The Impact

This study examined the relationship between target firms’ financial statement comparability and bidder firms’ boundary decisions. The study used initial public offering (IPO) firms as target firms to test the impact of asymmetric information and signaling on investing bidder firms’ boundary decisions, such as joint ventures or acquisitions. In the IPO market, as an experimental setting, bidder firms are unfamiliar with issuing firms because they have little information about them prior to the IPO. This study argues that IPO firms with higher accounting comparability show lower information asymmetry. Consistent with this argument, we found that IPO firms’ accounting comparability has a positive probability of becoming a target for either a joint venture or acquisition, or an acquisition instead of a joint venture. This study contributes to the literature, financial statement comparability, and joint venture and acquisition decisions to measure the degree to which information asymmetry affects corporate investment strategy using a unique experimental setting of IPO firms.

scholarly journals Corporate governance and IPO underpricing: evidence from the italian market

2021 ◽  
Author(s):  
Emanuele Teti ◽  
Ilaria Montefusco
Keyword(s):  
Corporate Governance ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Stock Option ◽  
Board Members ◽  
Ipo Underpricing ◽  
Italian Market ◽  
Public Offering ◽  
The Impact ◽  
Positive Effect

AbstractThis paper aims to analyse the impact of firms’ corporate governance characteristics on the degree of first-day returns (i.e., underpricing) in the Italian initial public offering (IPO) market. In particular, this work investigates the impacts of the characteristics of boards of directors (BoDs) and ownership structure on the underpricing of newly offered shares. By studying a sample of 128 Italian IPOs between 2000 and 2016, it is concluded that corporate governance characteristics affect the degree of first-day returns following a company’s IPO. More specifically, the size of the BoD negatively affects underpricing, while the ownership of institutional investors and board members has a positive effect on the degree of underpricing. Conversely, no significant evidence is found with regard to board independence, the number of female directors in the boardroom, the implementation of stock option plans and ownership concentration.

Friends in high places : two essays on the importance of corporate political connections

2015 ◽  
Author(s):  
◽  
Reza Houston
Keyword(s):  
Initial Public Offering ◽  
Political Connections ◽  
Target Firm ◽  
University Of Missouri ◽  
Accounting Performance ◽  
The Public ◽  
Public Offering ◽  
The University ◽  
The Impact ◽  
The Relationship

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] This study is an examination of the relationship between political connections and the undertaking of major firm events. In our first essay, presented in Chapter 3, we examine the impact politically connected appointments have on firm acquisition behavior. Using proxy statements, we create a unique database of politically connected bidders and merger targets. We find that bidders who hire connected individuals to the board or management team are more likely to avoid merger litigation. Connected bidders make more bids after the appointment. These firms also bid on larger targets. We determine there is a positive relation between the control premium and the relative of the target's connections. Connected acquirers have superior post-merger accounting performance, particularly when they acquire a connected target firm. In the second essay, presented in Chapter 4, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Politically connected IPO firms also have superior post-IPO returns relative to non-connected IPO firms.

scholarly journals Does Leverage Constrain Real and AEM Around IPO Corporate Event? Evidence from the Emerging Market

2019 ◽  
Vol 20 (2) ◽  
pp. 354-367
Author(s):  
Sani Hussaini Kalgo ◽  
Bany-Ariffin A.N. ◽  
Hairul Suhaimi Bin Nahar ◽  
Bolaji Tunde Matemilola
Keyword(s):  
Earnings Management ◽  
Initial Public Offering ◽  
Emerging Market ◽  
Order Theory ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Cross Sectional ◽  
Pecking Order Theory ◽  
Public Offering ◽  
The Impact

The article investigates whether Malaysian initial public offering (IPO) firms engage in real and accrual earnings management (AEM) and examines the impact of leverage on the earnings management’s discretionary behaviour of the firms for the period of 2003–2013. The Dechow, Sloan, and Sweeney (1995, The Accounting Review, 70[2], 193–225) cross-sectional modified Jones model was used to estimate discretionary accruals, while Roychowdhury’s (2006, Journal of Accounting and Economics, 42[3]), 335–370) cross-sectional models were used to investigate abnormal real activity discretionary behaviour. The results indicate Malaysian IPO firms engage in real and accrual discretionary behaviour. The graphical presentations of the earnings’ management proxies indicate higher real and AEM for high-leverage firms. Similarly, the multivariate analysis indicates a positive relationship between leverage and earnings management, which is in tandem with the agency cost of free cash flow theory and debt hypothesis. It is also consistent with the pecking-order theory of capital structure. This study suggests that regulatory agencies and standard setters should continue to improve quality of accounting reports in order to protect investors’ invested capital.

scholarly journals The Impact of R&D Alliance on the Survival of Newly Listed High Tech Firms

2016 ◽  
Vol 6 (2) ◽  
pp. 197
Author(s):  
Vicar S. Valencia
Keyword(s):  
United States ◽  
Longitudinal Data ◽  
Financial Performance ◽  
Initial Public Offering ◽  
The United States ◽  
High Tech ◽  
Estimation Strategy ◽  
Public Offering ◽  
The Impact

This paper investigates the extent to which R&D alliance participation affects the survival performance of newly listed high tech firms. The estimation strategy identifies the impact through changes on a firm’s alliance status. Using longitudinal data on high tech firms that had an initial public offering in the United States, results suggest that R&D collaborating firms experience greater survival, relative to non-R&D collaborating firms. In particular, participation in an R&D alliance is associated with an attenuation of delistment due to poor financial performance.

ASIAN AMERICAN-FOUNDED VENTURES IN SILICON VALLEY: CHALLENGES, STRATEGIC PARTNERSHIP, AND PERFORMANCE

2010 ◽  
Vol 18 (04) ◽  
pp. 355-375
Author(s):  
DAVID Y. CHOI ◽  
DONG CHEN ◽  
WOO JIN LEE
Keyword(s):  
Initial Public Offering ◽  
Asian American ◽  
Silicon Valley ◽  
Share Price ◽  
Strategic Partnership ◽  
Strategic Partnerships ◽  
Ipo Performance ◽  
And Performance ◽  
Public Offering ◽  
The Impact

This paper examines the performance of Silicon Valley ventures with Asian-American founding teams. We review some challenges faced by these ventures, compare their performance with that of other ventures, and analyze the impact of strategic partnerships on their performance. Our results indicate that firms founded by Asian American entrepreneurs tend to require more time to reach initial public offering (IPO) status than do other ventures in Silicon Valley. Our results further show that, despite needing this extra time, Asian American-founded ventures significantly outperformed their counterparts in 12-month post-IPO share price gain. This superior short-term post-IPO performance suggests that Asian American firms, particularly those that lacked relationships with U.S.-based strategic investors, might have been undervalued prior to and at IPO.

The Relationship between Boards of Directors and Initial Public Offerings in the Biotechnology Industry

1998 ◽  
Vol 22 (3) ◽  
pp. 5-29 ◽  
Author(s):  
Todd A. Finkle
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Boards Of Directors ◽  
Biotechnology Industry ◽  
Public Offerings ◽  
Biotechnology Firms ◽  
The Board Of Directors ◽  
And Performance ◽  
Public Offering ◽  
Performance Results

Utilizing the entire population of public biotechnology firms from 1980-1994, three models were tested to determine If a relationship exists between the size and composition of the board of directors and performance. Results indicate significant positive relationships between director expertise and the size of a firm's initial public offering. Going public during hot markets and larger firms were also related to larger Initial public offerings. These findings will benefit practitioners in the formation of boards within the biotechnology Industry. Managers of firms within the biotechnology industry who are contemplating a public offering will be able to proactively address the composition of their boards.

Assessing the Impact of Customer Concentration on Initial Public Offering and Balance Sheet–Based Outcomes

2017 ◽  
Vol 81 (6) ◽  
pp. 42-61 ◽  
Author(s):  
Alok R. Saboo ◽  
V. Kumar ◽  
Ankit Anand
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Balance Sheet ◽  
Performance Outcomes ◽  
Customer Relationships ◽  
Negative Effects ◽  
Public Offerings ◽  
Prior Literature ◽  
Public Offering ◽  
The Impact

Using the notion of customer concentration, the authors argue that firms should evenly spread their revenues across their customers, rather than focusing on a few major customer relationships. Prior literature suggests that major customers improve efficiency and provide access to resources, thereby producing positive performance outcomes. However, building on industrial organizational literature and modern portfolio theory, the authors argue that concentration of revenues reduces the supplier firm's bargaining power relative to its customers and hurts the ability of the supplier firm to appropriate value, which, in turn, hurts profits. Using a sample of 1,023 initial public offerings (IPOs) and robust econometric methods, they find that customer concentration reduces investor uncertainty and positively impacts IPO outcomes, but significantly hurts balance sheet–based outcomes (e.g., profitability). The results suggest that a 10% increase in customer concentration reduces profitability by 3.35% (or about $7 million) in the subsequent year, or 9.4% cumulatively over the next four years (or about $20.32 million). Further, the authors find that the negative effects of customer concentration decrease with increase in organizational (marketing, technological, and operational) capabilities and increase with low customer credit quality.

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