Top management team and IPO firms’ acquisition activity

Fariss T Mousa ( James Madison University Harrisonburg United States )
Sang Kyun Kim ( Sungkyunkwan University Seoul Korea, Republic of )
Mathew Rutherford ( James Madison University Harrisonburg United States )

Management Decision

ISSN: 0025-1747

Publication date: 3 March 2016

Abstract

Purpose

This study explores the role of the top management team (TMT) in determining whether IPO firms in high-tech industry will engage in acquisitions during the post-IPO period

Design/methodology/approach

We collect IPO and TMT data from firm prospectuses, and acquisition and financial data from SDC Platinum and Compustat, respectively. Poisson regression analysis is applied to test the effect of TMT characteristics on acquisition activity.

Findings

Using 135 IPO firms, we find evidence that TMT composition directly influences acquisition activity of IPO firms during the post-IPO period. Specifically, we find that TMT experience serving as members other firms’ boards and TMT experience in senior level management positions are both positively associated with acquisition activity. TMTs with prior IPO experience and TMTs with longer organizational tenures are negatively associated with acquisition activity.

Originality/value

This study is among the first to examine the impact of TMT demography on newly public firms’ acquisition activity. In doing so, it adds meaningfully to our understanding of the factors driving such firms’ strategic behavior.

Citation

Mousa, F., Kim, S. and Rutherford, M. (2016), "Top management team and IPO firms’ acquisition activity", Management Decision, Vol. 54 No. 3. https://doi.org/10.1108/MD-02-2015-0059

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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