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Family Firm Ipo Performance And Market Signals

Author

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  • HUNG-BIN DING

    (Loyola College in Maryland, 4501 N. Charles St., Baltimore, MD 21210, USA)

  • KUNTARA PUKTHUANTHONG-LE

    (San Diego State University, 5500 Campanile Dr., San Diego, CA 92182, USA)

Abstract

Recently, the interests in the performance of family firms in the capital market are on the rise. However studies on long-term performance give us little information about the performance of family firms in the initial public offering (IPO) markets. Building on agency theory, we investigated the effect of three IPO signals in family firm IPOs. Practices such as the appointment of outside non-family directors and waiting longer before going public significantly reduce underpricing. In addition, family owners' intent to retain large percentage of share in the long run is an indication of original shareholders' level of confidence in their own companies. Such confidence helps reduce after market investors' uncertainty and thus underpricing. On the other hand, family ownership at the IPO positively moderates the impact of non-family directors on underpricing.

Suggested Citation

  • Hung-Bin Ding & Kuntara Pukthuanthong-Le, 2009. "Family Firm Ipo Performance And Market Signals," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 17(01), pages 55-77.
    • Handle: RePEc:wsi:jecxxx:v:17:y:2009:i:01:n:s0218495809000266
    DOI: 10.1142/S0218495809000266
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    References listed on IDEAS

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    1. Jörn Hendrich Block & Andreas Thams, 2007. "Long-Term Orientation In Family And Non-Family Firms: A Bayesian Analysis," SFB 649 Discussion Papers SFB649DP2007-059, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
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    Cited by:

    1. Carbone, Emmadonata & Cirillo, Alessandro & Saggese, Sara & Sarto, Fabrizia, 2022. "IPO in family business: A systematic review and directions for future research," Journal of Family Business Strategy, Elsevier, vol. 13(1).

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