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Firm internationalization and IPO firm performance: The moderating effects of firm ownership structure

Hussam A. Al‐Shammari (Department of Management, Indiana University of Pennsylvania, Indiana, Pennsylvania, USA)
W. Ross O'Brien (Department of Management, University of Texas at Arlington, Arlington, Texas, USA)
Yousuf Hamed AlBusaidi (Department of Management, Sultan Qaboos University, Muscat, Sultanate of Oman)

International Journal of Commerce and Management

ISSN: 1056-9219

Article publication date: 30 August 2013

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Abstract

Purpose

Building on new venture internationalization, agency, and signaling theories, the purpose of this paper is to examine the relationship between the level of firm internationalization and initial public offering (IPO) performance. Further, the purpose of this paper is to evaluate the moderating role of firm ownership structure on this relationship.

Design/methodology/approach

The data set for this study is composed of 298 firms that made IPOs in years 1997, 1998, 2001 and 2002 in the US stock exchanges. The study utilizes hierarchical ordinary least squares (OLS) regression analyses to test its hypotheses. The model developed in this study identified IPO firm ownership structure as the moderator variable, IPO firm internationalization as the predictor variable, and underpricing as the criterion variable. This paper utilized robust regression modeling analyses available in Stata to analyze the data and test their hypotheses.

Findings

Results based on data collected from 298 IPO firms suggest that firm internationalization has a positive impact on IPO underpricing. Results also report that the relationship between firm internationalization and IPO underpricing is moderated by CEO and blockholder ownership, with the relationship being stronger in IPO firms with higher levels of CEO and blockholder ownership.

Originality/value

The current paper examines the impact of an IPO firm's internationalization prior to its going public on the subsequent performance of the IPO. In doing so, this paper seeks to help in resolving some of the apparent theoretical and empirical contradictions identified in literature. In addition, the introduction of IPO ownership structure as a moderator variable in the relationship between IPO firm internationalization and performance extends the applicability of agency theory to IPO firms and ensures a multi‐theoretic, finer‐grained conceptualization of this relationship.

Keywords

Citation

Al‐Shammari, H.A., Ross O'Brien, W. and Hamed AlBusaidi, Y. (2013), "Firm internationalization and IPO firm performance: The moderating effects of firm ownership structure", International Journal of Commerce and Management, Vol. 23 No. 3, pp. 242-261. https://doi.org/10.1108/IJCoMA-03-2013-0029

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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