The Impact of Slack Resources on High–Tech IPOs

Abstract

Research on organization slack has focused mainly on its effect in large publicly traded firms, but little work exists on the value of slack resources for other firms. Therefore, here, we address the question: Do slack resources matter in the case of initial public offerings (IPOs)? We argue that firms that possess financial, innovational, and managerial slack resources are sending a positive signal to potential investors regarding the quality of the IPO. Using a sample of high-tech IPOs, we find support for that contention.

Explaining the effect of rapid internationalization on horizontal foreign divestment in the retail sector: An extended Penrosean perspective

“…To control for non-managerial firm slack resources, we include firm profitability, measured as return on assets (e.g., Hitt, 1997), and cash slack, measured as the firm's amount of cash and cash equivalent reserves minus the industry average amount of cash and cash equivalent reserves (in billion dollars) (Mousa & Reed, 2013). We control for firm size because research shows that small firms are more likely to divest their foreign operations (Berry, 2013;Chen & Wu, 1996;Soule, Swaminathan, & Tihanyi, 2014).…”

Examining affective and cognitive discourse at the time of IPO: Effects on underpricing and the moderating role of entrepreneurial orientation

“…These years were selected in order to provide a 5-year period that avoids the majority of the dotcom bubble which ran from 1997 until early 2000, or the housing bubble stemming from increased foreclosure rates beginning in 2006, which depressed the market during the late 2000s and until quite recently. Based on Standard Industrial Classification (SIC) codes, firms were identified as operating in hightechnology industries sectors (e.g., Loughran & Ritter, 2004;Mousa & Reed, 2013). Consistent with prior research in the field, holding companies, financial institutions, and real estate investment trusts (REITs) were excluded from the sample (e.g., Fischer & Pollock, 2004).…”

When less is more: EO's influence upon funds raised by young technology firms at IPO

“…IPO value has long been established as a short-term measure of firm performance and is a central measure of how the market values a firm at the time of its initial offering (Gulati & Higgins, 2003;Zimmerman, 2008). IPO Value is calculated by subtracting underwriters' fees from the total value of the capital raised by the IPO (Gulati & Higgins, 2003;Mousa & Reed, 2013;Zimmerman, 2008).…”

“…Similarly, larger firms may outperform smaller ones in terms of investor valuation (Megginson & Weiss, 1991). We also included a control variable for firm performance, measured as return on assets (ROA) at the time of IPO (Mousa & Reed, 2013;. A firm's risk position was another control variable that we applied on both models and was operationalized as the number of risk factors as reported in the prospectus (Beatty & Zajac, 1994).…”