Signaling, resource-based power, and pre-IPO organizational change
The theory presented suggests that underwriters are both advisors and independent agents in the issuerʼs attempt to send “signals” of quality to investors by making pre-IPO organizational changes. These pre-IPO gambits are intended to increase IPO proceeds, and preemptively address potential investo...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2012-03-01
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| Series: | New England Journal of Entrepreneurship |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/NEJE-15-01-2012-B003/full/pdf?title=signaling-resource-based-power-and-pre-ipo-organizational-change |
| Summary: | The theory presented suggests that underwriters are both advisors and independent agents in the issuerʼs attempt to send “signals” of quality to investors by making pre-IPO organizational changes. These pre-IPO gambits are intended to increase IPO proceeds, and preemptively address potential investor concerns that would deter them from subscribing. These organizational changes initially can financially benefit founders, early investors and underwriters. But they can also have a longterm impact that some issuers, especially founders, would prefer to avoid. Utilizing signaling and resource-based power, we find that underwriter power is significantly associated with making pre-IPO gambits and lower levels of underpricing. |
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| ISSN: | 2574-8904 |