Please use this identifier to cite or link to this item: https://repositorio.insper.edu.br/handle/11224/6070
Type: Artigo Científico
Title: The Tradeoff Between Private Equity Sponsorship, Board Centrality, and Experience as Credible Signals for IPO Performance
Author: Kirschbaum, Charles
Minardi, Andrea Maria Accioly Fonseca
Silva, Emília Borges da
Rossoni, Luciano
Publication Date: 2023
Abstract: Private equity funds implement various management and governance practices in firms they endorse, signaling higher quality of sponsored IPOs (Initial Public Offer). However, the participation of such PE funds comes at a cost for newcomer firms, as they may lose both autonomy and future post-IPO earnings. If they do not choose to signal quality through PE funds, the IPO literature points to the validity of other mechanisms, such as the experience and centrality of the board of directors. We theorize and test the effect of the tradeoff between private equity sponsorship and board centrality and experience on IPO performance. We analyzed the effects of signaling on long-term performance through the one-year cumulative abnormal return in Brazilian IPOs issued between 2004 and 2013. Our results indicate that private equity sponsorship is the most effective signal, completely overtaking the relevance of board centrality and experience to explain IPO performance. However, these latter board characteristics significantly affected the performance of non-private equity-backed IPOs. Between PE-backed companies, there is a reverse effect of the board centrality on the IPO's performance and a substitution effect of the board's previous experience with IPO processes.
Keywords (english terms): Private equity funds
Initial Public Offer - IPO
IPO processe
Language: Inglês
CNPq Area: Ciências Sociais Aplicadas
URI: https://www.cambridge.org/core/journals/management-and-organization-review/article/abs/tradeoff-between-private-equity-sponsorship-board-centrality-and-experience-as-credible-signals-for-ipo-performance/3378298204101A798952A5E38391E22E
Copyright: O INSPER E ESTE REPOSITÓRIO NÃO DETÊM OS DIREITOS DE USO E REPRODUÇÃO DOS CONTEÚDOS AQUI REGISTRADOS. É RESPONSABILIDADE DOS USUÁRIOS INDIVIDUAIS VERIFICAR OS USOS PERMITIDOS NA FONTE ORIGINAL, RESPEITANDO-SE OS DIREITOS DE AUTOR OU EDITOR
Appears in Collections:Coleção de Artigos Científicos

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