Founder-CEO board involvement and optimal IPO valuation

Fariss-Terry Mousa (Department of Management, College of Business, James Madison University, Harrisonburg, Virginia, USA)
William J. Ritchie (Department of Management, College of Business, James Madison University, Harrisonburg, Virginia, USA)
Richard Reed (Department of Management and Labor Relations, Monte Ahuja College of Business, Cleveland State University, Cleveland, Ohio, USA)

Management Decision

ISSN: 0025-1747

Publication date: 13 May 2014

Abstract

Purpose

The purpose of this paper is to extend governance research in the small business context by examining the moderating influence of top executive involvement on the board of directors on market valuation.

Design/methodology/approach

Drawing on a sample of initial public offering (IPO) high-tech firms engaged in late-stage funding, the study uses stepwise regression to test board involvement moderation effects.

Findings

Primary market investors reward governance structures that limit founder power.

Originality/value

The current study introduces the notion that optimal market valuation depends not only on whether a CEO-founder governs the firm, but also on level of involvement on the board of directors.

Keywords

Citation

Mousa, F.-T., J. Ritchie, W. and Reed, R. (2014), "Founder-CEO board involvement and optimal IPO valuation", Management Decision, Vol. 52 No. 3, pp. 642-657. https://doi.org/10.1108/MD-02-2013-0088

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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