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- Title
INFLUENCING INITIAL PUBLIC OFFERING INVESTORS WITH PRESTIGE: SIGNALING WITH BOARD STRUCTURES.
- Authors
Certo, S. Trevis
- Abstract
I describe how board structures influence the decision-making processes that investors use when purchasing shares of firms undertaking initial public offerings (IPOs). IPO firms are relatively unknown to investors and suffer from a liability of market newness. I rely on signaling theory, institutional theory, and sociological research on prestige to suggest that investor perceptions of board prestige signal organizational legitimacy, thereby reducing the liability of market newness and improving IPO firm stock performance. I also propose that the characteristics of investors, namely prestige, influence their perceptions of board prestige.
- Subjects
GOING public (Securities); INVESTORS; ORGANIZATIONAL structure; BOARDS of directors; STOCKS (Finance); STOCK ownership; INSTITUTIONAL theory (Sociology); ORGANIZATIONAL sociology research; PRESTIGE; DECISION making
- Publication
Academy of Management Review, 2003, Vol 28, Issue 3, p432
- ISSN
0363-7425
- Publication type
Article
- DOI
10.5465/AMR.2003.10196754