Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity

Entrepreneurship Theory and Practice, forthcoming

61 Pages Posted: 21 Jun 2016 Last revised: 24 Apr 2020

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Manish Gupta

Nottingham University Business School

Karen Simonyan

Suffolk University - Department of Finance

Date Written: September 5, 2018

Abstract

Using hand-collected data on top management team human capital (“management quality”) of a large sample of private firms, we analyze the effect of top management quality on pre-IPO innovativeness and the innovation strategies of these firms. We also analyze how management quality and pre-IPO innovation relate to these firms’ IPO characteristics. We hypothesize that firms with higher quality management teams invest in a greater proportion of long-term (innovative) projects, select better innovation projects, and manage innovation resources more efficiently, resulting in higher innovation productivity. We also hypothesize that such firms reap greater IPO market rewards. The evidence supports these hypotheses.

Keywords: Corporate Innovation; Private Firms; Initial Public Offerings (IPOs); Top Management Human Capital

JEL Classification: G31, O31, O32

Suggested Citation

Chemmanur, Thomas J. and Gupta, Manish and Simonyan, Karen, Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity (September 5, 2018). Entrepreneurship Theory and Practice, forthcoming. Available at SSRN: https://ssrn.com/abstract=2798443 or http://dx.doi.org/10.2139/ssrn.2798443

Thomas J. Chemmanur

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Manish Gupta

Nottingham University Business School ( email )

University of Nottingham
Jubilee Campus
Nottingham, NG8 1BB
United Kingdom

Karen Simonyan (Contact Author)

Suffolk University - Department of Finance ( email )

8 Ashburton Place-Beacon Hill
Boston, MA 02108-2770
United States
(617) 973-5385 (Phone)

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