Do executives' backgrounds matter to IPO investors? Evidence from the life science industry.
PLoS One
; 8(5): e60911, 2013.
Article
em En
| MEDLINE
| ID: mdl-23690920
ABSTRACT
In this study, we focus on the impact of senior executives' industry backgrounds on the amount of capital raised in the stock market. The primary contribution of the study entails applying the upper echelon theory to the initial public offering (IPO) phenomenon. Specifically, we hypothesize that the industry backgrounds of corporate executives affect the amount of capital that the firm raised in the primary stock market. We argue that the firm's future investment strategies are unobserved by the investors ex-ante and investors expect firms' investment strategies to be based on the executives' industry backgrounds. As a result, the executives' industry backgrounds influence the investors' expectations about what investment strategies the firm is likely to deploy. Furthermore, the above logic also suggests that executives of different industry backgrounds should prefer different investment strategies corresponding with demand for different amount of capital. As a result, we expect the industry backgrounds to covary with the capital raised from both the supply and demand perspectives. To test the hypotheses, we ran a reduced econometric model wherein the executives' background predicts the amount of capital raised. Regression analyses suggest that the capital raised is negatively associated with the number of senior executives with prior career experience in the healthcare and genomic sectors but positively associated with the number of senior executives with prior career experience in regulatory affairs. The results provide tentative support for the notion that investors infer corporate strategies from senior executives' industry backgrounds.
Texto completo:
1
Coleções:
01-internacional
Contexto em Saúde:
1_ASSA2030
Base de dados:
MEDLINE
Assunto principal:
Pessoal Administrativo
/
Disciplinas das Ciências Biológicas
/
Indústrias
/
Investimentos em Saúde
Tipo de estudo:
Prognostic_studies
Idioma:
En
Revista:
PLoS One
Ano de publicação:
2013
Tipo de documento:
Article