Building Perceived Quality of Founder-Involved IPO Firms: Founders' Effects on Board Selection and Stock Market Performance

17 Pages Posted: 17 Mar 2011

See all articles by Salim Chahine

Salim Chahine

American University of Beirut - Olayan School of Business

Igor Filatotchev

affiliation not provided to SSRN

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: March 16, 2011

Abstract

Research on governance has focused on large corporations, giving far less attention to smaller and younger companies especially those moving from founder-controlled start-ups to professionally managed public companies. Emphasizing founder-involved firms (i.e., firms that are floated by their original founders), this article examines interlinks between founders' prestige and selection of inside and outside directors, and short-term performance measured in terms of IPO underpricing. The results provide evidence of positive association between founders' and directors' prestige, but there is substitution between inside and outside directors' prestige. Top management team's external board experiences reduce IPO underpricing.

Suggested Citation

Chahine, Salim and Filatotchev, Igor and Zahra, Shaker A., Building Perceived Quality of Founder-Involved IPO Firms: Founders' Effects on Board Selection and Stock Market Performance (March 16, 2011). Entrepreneurship Theory and Practice, Vol. 35, Issue 2, pp. 319-335, 2011. Available at SSRN: https://ssrn.com/abstract=1788696 or http://dx.doi.org/10.1111/j.1540-6520.2009.00361.x

Salim Chahine (Contact Author)

American University of Beirut - Olayan School of Business ( email )

Bliss Street
Beirut 1107 2020
Lebanon
961-1-374-374 (Phone)

Igor Filatotchev

affiliation not provided to SSRN

Shaker A. Zahra

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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