Initial public offering investor valuations

An examination of top management team prestige and environmental uncertainty

Richard H. Lester, Samuel Certo, Catherine M. Dalton, Dan R. Dalton, Albert A. Cannella

Research output: Contribution to journalArticle

126 Citations (Scopus)

Abstract

Relying on one of the more notable entrepreneurial settings, an initial public offering (IPO), this article extends prior work on top management team (TMT) characteristics. We examine whether or not prestigious TMTs at the time of an IPO enhance organizational legitimacy and thereby provide a signal to potential investors. Because an IPO represents an entrepreneurial context characterized by high levels of uncertainty, we also consider the impact of environmental uncertainty on the TMT prestige/investor valuation relationship. We find that both an element of TMT prestige and environmental uncertainty influence investor valuations. However, we also find that the influence of prestige does not assuage investors when analyzing IPOs in different environmental conditions.

Original languageEnglish (US)
Pages (from-to)1-26
Number of pages26
JournalJournal of Small Business Management
Volume44
Issue number1
DOIs
StatePublished - Jan 2006
Externally publishedYes

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Environmental uncertainty
Top management teams
Investors
Prestige
Initial public offerings
Uncertainty
Environmental conditions
Organizational legitimacy

ASJC Scopus subject areas

  • Management of Technology and Innovation
  • Strategy and Management
  • Business, Management and Accounting(all)

Cite this

Initial public offering investor valuations : An examination of top management team prestige and environmental uncertainty. / Lester, Richard H.; Certo, Samuel; Dalton, Catherine M.; Dalton, Dan R.; Cannella, Albert A.

In: Journal of Small Business Management, Vol. 44, No. 1, 01.2006, p. 1-26.

Research output: Contribution to journalArticle

Lester, Richard H. ; Certo, Samuel ; Dalton, Catherine M. ; Dalton, Dan R. ; Cannella, Albert A. / Initial public offering investor valuations : An examination of top management team prestige and environmental uncertainty. In: Journal of Small Business Management. 2006 ; Vol. 44, No. 1. pp. 1-26.
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