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Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms

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Listed:
  • Michael S. McLeod

    (Wichita State University)

  • Curt B. Moore

    (West Virginia University)

  • G. Tyge Payne

    (Texas Tech University)

  • Jennifer C. Sexton

    (West Virginia University)

  • Robert E. Evert

    (Texas Tech University)

Abstract

Organizational virtue orientation (OVO), an organizational-level construct, refers to the integrated set of beliefs and values that support ethical character traits and virtuous behaviors. To advance the study of organizational virtue, we examine OVO in firms making their initial public offerings (IPOs), with respect to key external stakeholders that serve as financial intermediaries (i.e., venture capital firms and underwriting banks). Drawing on stakeholder and resource dependence theories, we argue that mutual interdependencies occur between financial intermediaries and IPO firms such that venture capital firms’ ownership levels and underwriter reputation are positively associated with the selection of more virtuous IPO firms. We also argue for the moderating relationship of IPO firm age on these main relationships; since IPO firms have more history and information availability, less importance will be placed on OVO in the selection process. In support of our hypotheses, the results of this study suggest the organizational virtue of IPO firms influences the selection decisions of financial intermediaries by reflecting positively on these key stakeholders to improve legitimacy and reputation.

Suggested Citation

  • Michael S. McLeod & Curt B. Moore & G. Tyge Payne & Jennifer C. Sexton & Robert E. Evert, 2018. "Organizational Virtue and Stakeholder Interdependence: An Empirical Examination of Financial Intermediaries and IPO Firms," Journal of Business Ethics, Springer, vol. 149(4), pages 785-798, June.
    • Handle: RePEc:kap:jbuset:v:149:y:2018:i:4:d:10.1007_s10551-016-3021-1
    DOI: 10.1007/s10551-016-3021-1
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    2. Chandler, Jeffrey A. & Payne, G. Tyge & Moore, Curt & Brigham, Keith H., 2019. "Family involvement signals in initial public offerings," Journal of Family Business Strategy, Elsevier, vol. 10(1), pages 8-16.
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    5. Gisela Demo & Elaine Rabelo Neiva & Karla Veloso Coura & Sinésio Gomide Júnior & Ana Carolina Rezende Costa, 2022. "Do Organizational Virtues Enhance Work Well-being? The Mediator Role of HRM Practices," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 26(6), pages 200144-2001.
    6. Abdul WAHID & Muhammad Zubair MUMTAZ & Edmund H. MANTELL, 2020. "Short-Run Pricing Performance of Local and Dual Class IPOs in Alternative Investment Market," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 57-74, March.
    7. Michael S. McLeod & Joshua B. Sears & Gaylen N. Chandler & G. Tyge Payne & Keith H. Brigham, 2022. "Rhetoric, Risk, and Investment: Letting the Numbers Speak for Themselves," Journal of Management Studies, Wiley Blackwell, vol. 59(7), pages 1657-1687, November.

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