All Ties are Not Created Equal: Institutional Equity Ties, IPO Performance, and Market Growth of New Ventures

Oxford Handbook of IPO, Forthcoming

35 Pages Posted: 4 Oct 2017

See all articles by Yong Li

Yong Li

University of Nevada Las Vegas

Emery Yao

University of Kentucky - Management

Date Written: May 10, 2017

Abstract

This study examines whether and how different types of institutional ties affect new venture performance at different organizational stages. We propose that equity ties to government agencies will enhance the speed and returns of IPO but hinder post-IPO market growth. By contrast, we posit that equity ties to research institutes will contribute positively to both IPO performance and post-IPO market growth. We build our arguments on how the two types of institutional ties meet new ventures’ need to be legitimate and competitive pre- and post-IPO. We test our hypotheses with new ventures in the pharmaceutical and chemical industries that went public in China and find supportive evidence for our arguments.

Keywords: institutional ties, IPO, market growth, legitimacy, competition, new ventures

Suggested Citation

Li, Yong and Yao, Emery, All Ties are Not Created Equal: Institutional Equity Ties, IPO Performance, and Market Growth of New Ventures (May 10, 2017). Oxford Handbook of IPO, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3046683

Yong Li (Contact Author)

University of Nevada Las Vegas ( email )

4505 S. Maryland Parkway
Las Vegas, NV 89154
United States

Emery Yao

University of Kentucky - Management ( email )

United States

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