IPO‐related organizational change and long‐term performance: considerations of Dutch corporate officers

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractMainstream literature on long-term performance of initial public offerings focuses on long-term underperformance. Because underperformance is an anomalous phenomenon, many authors search for explanations based on financial market imperfections. More recently, however, the attention shifts from underperformance to long-term performance in general. This induces the search for other than financial market imperfections in explaining under-or outperformance. This article presents the idea that in many companies the preparation for the IPO and the IPO itself may bring organizational change. It searches for IPO-related organizational change in The Netherlands with interviews of Dutch corporate officers. The research shows that an IPO primarily changes financial management and financial reporting, but that other types of organizational change may also be relevant. Moreover, long-term stock market performance was on average higher in companies where IPO-related organizational changes were reported than in companies where the changes were not reported.JEL Classification: G12, G14, G15, G34

IPOs, institutional complexity, and management accounting in hybrid organisations: A field study in a state-owned enterprise in China

“…Prior research has touched upon this issue tangentially and generated inconclusive and partial results. This paper echoes prior research indicating that IPOs prompt newly listed firms to reconfigure their MA practices (Kraus and Strömsten, 2012;O'Connor, et al 2004;O'Connor et al, 2006;Von Eije et al, 2004). It also provides detailed field-based evidence on how MA is implemented in these firms, even though some of this evidence appears dissimilar to that documented in prior research.…”

“…However, studies addressing whether, how, and why IPOs shape the MA practices of newly listed firms are relatively limited, and the findings generated so far are inconclusive and partial. Some research has suggested that IPOs may prompt newly listed firms to change their MA practices (Kraus and Strömsten, 2012;O'Connor et al, 2004;O'Connor et al, 2006;Von Eije et al, 2004). However, Davila (2005) finds that IPOs did not lead small, young, and growing firms in Silicon Valley to change their control systems into more formal ones.…”

“…One exception is the research undertaken by Von Eije et al (2004), who have conducted a survey to investigate IPO-related organisational change in Dutch listed firms. They find that one of the most relevant IPO-related changes concerned financial management, including planning and control and capital budgeting, though how and why these changes occurred has not been examined in-depth.…”

“…However, despite the close linkages between management accounting, financial accounting, and corporate governance (Bhimani, 2009;Hemmer and Labro, 2008;Merchant and Van der Stede, 2012), research into the effect of IPOs on the management accounting (MA) practices of newly listed firms is relatively limited and the findings generated so far appear inconclusive and partial. First, there is evidence that IPOs may facilitate changes in the planning and control, performance measurement, and capital budgeting of newly listed companies (Kraus and Strömsten, 2012;Von Eije et al, 2004). Conversely, IPOs have also been reported to fail to change the control systems of small, young, and growing firms into more formal ones (Davila, 2005).…”

CEOs and CFOs on IPOs: The Process and Success of Going Public

“…Firms can use the IPO proceeds and capital market access for strategic acquisitions and to compete more aggressively (Maksimovic and Pichler 2001;Schultz and Zaman 2001;Chod and Lyandres 2011;De Jong et al 2012). Also, a firm's organizational structure may benefit from the preparations of the IPO, and from the disciplinary role of reporting requirements, governance standards and visibility after the IPO (Burton et al 2004;von Eije et al 2004). Pagano et al (1996Pagano et al ( , 1998 show that Italian firms borrow more cheaply after an IPO.…”