Founders and board structure: Evidence from UK IPO firms

Wu, Chloe Yu-Hsuan; Hsu, Hwa Hsien

doi:10.1016/j.irfa.2017.12.002

Cited by 9 publications

(12 citation statements)

References 91 publications

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“…Similar with board size, previous studies show contrasting evidence regarding the relationship between ownership type and board independence in different institutional contexts. On the one hand, scholars find that state-owned sub-Saharan firms (Munisi et al, 2014) and Western firms owned by the founder (Wu & Hsu, 2018), institutional investors (Appel et al, 2016;Hoskisson, Hitt, Johnson, & Grossman, 2002;Schnatterly & Johnson, 2014;Zahra, 1996), and VCs (e.g., Giovannini, 2010;Nahata, 2019;Roosenboom, 2005;Shekhar & Stapledon, 2007) Despite the mixed findings regarding the relationship between the presence of institutional owners and the degree of board independence, extant research shows that the former relies on the latter to discipline firm management and find other independent directors to increase market value (Gillan & Starks, 2000;Nguyen & Nielsen, 2010).…”

Section: Board Independencementioning

confidence: 99%

Bringing owners back on board: A review of the role of ownership type in board governance

Federo

Ponomareva

Aguilera

et al. 2020

Corporate Governance

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Research Question/Issue In this comprehensive literature review, we synthesize and analyze the current state of academic research regarding the relatively understudied relationship between the type of owners and board governance. Research Findings/Insights Our review of the existing literature at the intersection of ownership and board governance research discusses how six distinct ownership types—pertaining to family, lone founder, corporation, institutional investor, state, and venture capitalist—shape board governance, defined as board structure, composition, and processes. We also uncover the influence of ownership type on board functional performance (i.e., monitoring, resource provision, and strategic involvement) and the implications of these owner–board relationships for a variety of firm outcomes (related to performance and compliance). Theoretical/Academic Implications We present identifiable patterns in board governance and functional performance associated with each ownership type and their respective implications for a wide range of firm outcomes. We then propose seven core emerging themes that deserve further scholarly attention. Practitioner/Policy Implications Our analysis cautions against the application of the “one‐size‐fits‐all” best‐practices approach in board governance advocated by policy makers, scholars, and corporate governance activists and underscores the need to consider the contingent effects of different owners' behaviors and interests in shaping and assessing board governance.

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Section: Board Independencementioning

confidence: 99%

Bringing owners back on board: A review of the role of ownership type in board governance

Federo

Ponomareva

Aguilera

et al. 2020

Corporate Governance

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“…Consequently, we include corporate governance characteristics in our analysis as investors are likely to demand signals that reduce possible agency issues. To proxy these the level of retained ownership by insiders after the IPO, the lock-up period, the board size and independence, as well as the proportion of female board members are presumed to decrease the probability of IPO withdrawal (Howton et al, 2001, Djerbi and Anis, 2015, Brav and Gompers, 2003, Gao et al, 2017, Wu and Hsu, 2018. CEO duality, a role combination of the chairman and CEO, is expected to increase the likelihood of IPO withdrawal (Bhagat and Bolton, 2008).…”

Section: Insert Table 3 About Herementioning

confidence: 99%

The determinants of IPO withdrawal – Evidence from Europe

Helbing

Lucey

Vigne

2019

Journal of Corporate Finance

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Why do companies not follow through with an IPO after filing for one? This question is investigated by examining common stock IPOs for the largest countries in Europe. We cover 80% of the Western European IPO market over the 2001-2015 period. We establish that the IPO phenomenon of withdrawal is a common feature of equity markets and identify key characteristics that influence the probability of withdrawal. Findings indicate that venture capital or private equity involvement, the presence of negative news, CEO duality, or the intent to retire debt increase the probability of IPO withdrawal. On the other hand, higher levels of corporate governance or trading volume decrease the probability of IPO withdrawal. We argue that imminent agency conflicts and the lack of appropriate control mechanisms can force a company to withdraw from the IPO.

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“…Hence, founders are likely to consider organizational design choices, which alleviate some of their attention constraints during the startup phase. However, extant literature has focused much more on later stages in the organizational lifecycle in which startups have already generated substantial sales (Daily & Dalton, ), enter stable environments (Gedajlovic, Lubatkin, & Schulze, ) or target initial public offerings (IPOs) (Wu & Hsu, ).…”

Section: Introductionmentioning

confidence: 99%

Organizational design choices of high‐tech startups: How middle management drives innovation performance

Grimpe

Murmann

Sofka

2019

Strategic Entrepreneurship

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Research Summary Innovative products and services are the inspiration for many startups. However, founders find that the management of existing operations competes with the attention that they can devote to innovation. We investigate whether and how establishing a middle management level frees up attention for innovation when firms are newly started. We argue that middle management is positively related to introducing product innovations and that the effect is stronger when founders have larger stocks of pre‐existing knowledge and when the startup's industry provides more innovation opportunities. These hypotheses are supported by an analysis of 2,431 German high‐tech startups founded between 2005 and 2012. Managerial Summary Most high‐tech entrepreneurs acknowledge that an overload of managerial tasks keeps them from advancing innovation in their startups. However, they are often times reluctant to introduce middle management because of a fear that the resulting bureaucratization will stifle innovation. Our study shows that these fears are not justified. Instead, we find for 2,431 high‐tech startups in Germany that startups with middle managers are significantly more innovative than those without. While middle managers might be a roadblock for innovation in large firms, startups benefit from having them. Founders are the central decision makers in startups and can easily be overburdened with management tasks. Middle managers can alleviate parts of this workload and allow founders to focus on creating innovative products and services.

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Founders and board structure: Evidence from UK IPO firms

Cited by 9 publications

References 91 publications

Bringing owners back on board: A review of the role of ownership type in board governance

Bringing owners back on board: A review of the role of ownership type in board governance

The determinants of IPO withdrawal – Evidence from Europe

Organizational design choices of high‐tech startups: How middle management drives innovation performance

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