Examining the relative influence of upper echelons ties on IPO underpricing
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- Reutzel, C.R. & Belsito, C.A. Int Entrep Manag J (2012) 8: 1. doi:10.1007/s11365-010-0163-y
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Integrating signaling theory with insights derived from the attention based view, this study addresses the question of which types of upper echelons ties initial public offering (IPO) markets value more. Specifically, we argue that the signals conveyed by upper echelons ties with publicly traded firms are perceived by IPO equity markets as more valuable than upper echelons ties with privately held firms. Additionally, we contend that the signals sent by external directorates with publicly traded firms are perceived more favorably by IPO equity markets than managerial ties with publicly traded firms. The theory in this study is tested on a sample of 366 firms than underwent their IPOs during 1997. The results of hypothesis tests provide partial support for our arguments.