Executive Incentive Schemes in Initial Public Offerings: The Effects of Multiple-Agency Conflicts and Corporate Governance

Allcock, Deborah; Filatotchev, Igor

doi:10.1177/0149206308329962

Cited by 48 publications

(23 citation statements)

References 99 publications

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“…Furthermore, the possibility that the types and amounts of residual losses can change in organizational transitions is not considered; but this dynamic element of agency costs is fundamental to value creation in the MBO of a family firm. This study also adds to the literature on the double agency problems that exist among managers, which are only starting to receive attention by researchers (Allcock & Filatochev, 2010;Arthurs, Hoskisson, Busenitz, & Johnson, 2008;Bruton, Filatotchev, Chahine, & Wright, 2010;Child & Rodrigues, 2003). In examining double agency issues we explore a hitherto neglected context that contributes to establishing the boundary conditions of the theory.…”

mentioning

confidence: 84%

An agency theoretic analysis of value creation through management buy-outs of family firms

Chrisman

Chua

Steier

et al. 2012

Journal of Family Business Strategy

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mentioning

confidence: 84%

An agency theoretic analysis of value creation through management buy-outs of family firms

Chrisman

Chua

Steier

et al. 2012

Journal of Family Business Strategy

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“…The absence of qualified board and executive members may negatively impact the ability of the board to perform effectively, particularly as trends indicate that boards of directors have been grossly undermined by shareholders in terms of appointments and recruitment (Allcock & Filatotchev, 2010;Ensley, Pearson & Amason, 2002;Larcker & Tayan, 2011). One of the basic considerations in appointing and recruiting executives is to ensure a high quality and knowledgeable board that understands the organisations' core competencies and its own distinct roles and responsibilities to achieve long-terms performance (Mwenja & Lewis, 2009).…”

Section: Corporate Governance Systemsmentioning

confidence: 99%

Entrepreneurial orientation and corporate governance structures at the firm level in the South African oil and gas industry

Molokwu

Barreria

Urban

2013

SA j. hum. resour. manag.

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Orientation: Corporate governance systems (CGS) have been observed as one of the most important structures and mechanisms that regulate the relationships between executives and shareholders. By having well-defined and established CGS, company board members and executives are able to shape company vision and increase managerial commitment towards formulating strategies that espouse an entrepreneurial orientation (EO). Firms with high levels of EO tend to be innovative and encourage creative initiatives in new products and technology developments. Research purpose: In an emerging economy such as South Africa, one of the primary goals of an organisation is growth and good governance, which can be achieved through wellgoverned structures and continuous innovation in the face of challenges. This study identified potential links between the multidimensional constructs of CGS and EO at the firm level in the South African oil and gas industry.Motivation for the study: One of the greatest challenges faced by organisations when implementing CGS is to ensure compliance.Research design, approach and method: Board members and senior decision-makers were surveyed in the South African oil and gas industry, using a structured questionnaire. A series of correlational analyses were used to determine the strength of relationships between the dimensions of EO and CGS.Main findings: By drawing extensively on existing theory on EO, this study found that the different dimensions of CGS have a significant and positive relationship with each of the EO dimensions – innovation, risk-taking and proactiveness.Practical/managerial implications: Corporate boards supportive of entrepreneurship must provide appropriate reward systems, top management support, explicit goals and appropriate organisational values which signal to employees that entrepreneurial behaviour action is desirable. Practitioners should scrutinise their governance structures in their organisations to ensure an alignment with EO practices.Contribution/value-add: Generally, research on EO and governance in Africa as a whole may be considered as valuable, as very few empirical studies have been previously conducted which focus on the nexus of CGS and EO. The study is one of the first to conduct empirical research on EO and CGS in an emerging market and unique industry context – the South African oil and gas industry.

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“…Age of the firm was calculated as the years from the date of founding to the time of the IPO, and size of the firm was coded as the log of the total number of employees. Older and bigger companies suffer less from “liability of newness” about the firm's future prospects and have more sophisticated organizational structure (Allcock & Filatotchev, ; Park & Patel, ; Sundaramurthy et al, ). These two measures are also proxies for the risk associated with an IPO (Certo, Daily, et al, ).…”

Section: Methodsmentioning

confidence: 99%

Initial public offering valuation and prior shared experience in the boardroom of threshold ventures: A study of industry effects

Pérez‐Calero

Larrañeta

Wright

2019

Corporate Governance

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Research question/issue We explore the following question: How do initial public offering (IPO) investors value the existence of prior shared experience (PSE) between the CEO and the board of threshold ventures? Research findings/insights Building on the resource provision role of the board, signaling, and the dynamics of decision making within teams literatures, our results show that extensive PSE between the CEO and the board is detrimental to IPO valuation because it augments the perceived risk of overconfidence and myopic decisions sending negative signals to investors. Yet, the industry diversity of that PSE and the level of industry ambiguity mitigate such negative signaling effects. Theoretical/academic implications We make three main contributions to the literature. First, we make a specific contribution by advancing that extensive PSE between the CEO and the board is detrimental for IPO value, unless it is mitigated by the diversity of such PSEs across different industries. Our results therefore highlight boundaries within which previously accepted findings about the positive relationship between PSE and new venture performance do not hold. Second, we enrich our understanding of the relationship between board design and industry conditions by showing that investors perceive differently the extensiveness of PSE between the CEO and the board depending on the degree of industry ambiguity. Overall, we move beyond prior research on signaling, which has tended to focus on primary intended and costly signals, exploring signals with potential negative effects at IPO. Practitioner/Policy Implications Our research has practical implications for ambitious entrepreneurial ventures trying to achieve high growth by going public in their early stages of development. Board compositions may commonly be transformed ahead of IPOs to send a signal to the potential investors about their effectiveness in meeting the strategic challenges of being in the public arena. Our findings suggest that entrepreneurs, pre‐IPO investors, and their advisors may need to adopt a fine‐grained approach to constructing effective boards at an early stage.

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Executive Incentive Schemes in Initial Public Offerings: The Effects of Multiple-Agency Conflicts and Corporate Governance

Cited by 48 publications

References 99 publications

An agency theoretic analysis of value creation through management buy-outs of family firms

An agency theoretic analysis of value creation through management buy-outs of family firms

Entrepreneurial orientation and corporate governance structures at the firm level in the South African oil and gas industry

Initial public offering valuation and prior shared experience in the boardroom of threshold ventures: A study of industry effects

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