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Impact of Charismatic Leadership and Market Shares on IPO First-Day Returns: The Case of Technology Firms

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  • Wing Him Yeung
  • Yuanyuan Wu
  • Feiyuan Liu

Abstract

First-day returns of initial public offerings (IPOs) have always been an important topic in academic research. Previous literature generally attributes the first-day return of an IPO to the underpricing of the stock, and most studies emphasize on the market-level factors such as the hot market influence and people’s pursuit over IPOs based on the pre-selling market return data. Firm-level variations, on the other hand, are generally under investigated. This research investigates the variations across companies by focusing on two factors that previous studies have not fully articulated: charismatic leadership and market shares. Using logistic regression analysis and a sample of 92 firms in technology industries that went public in the USA during the period from 1 January 2012 to 31 December 2014, we find that there is a statistically significant and positive relationship between charismatic leadership and first-day returns of IPOs, as well as between market shares and first-day returns of IPOs. Our study contributes to the IPO performance literature, and it provides practical implications on IPO management and investment.

Suggested Citation

  • Wing Him Yeung & Yuanyuan Wu & Feiyuan Liu, 2018. "Impact of Charismatic Leadership and Market Shares on IPO First-Day Returns: The Case of Technology Firms," Global Business Review, International Management Institute, vol. 19(4), pages 859-872, August.
    • Handle: RePEc:sae:globus:v:19:y:2018:i:4:p:859-872
    DOI: 10.1177/0972150918772922
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    References listed on IDEAS

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    1. Yung, Chris & Çolak, Gönül & Wei Wang, 2008. "Cycles in the IPO market," Journal of Financial Economics, Elsevier, vol. 89(1), pages 192-208, July.
    2. Gale, Bradley T, 1972. "Market Share and Rate of Return," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 412-423, November.
    3. Tim Loughran & Jay R. Ritter, 2002. "Why Don't Issuers Get Upset About Leaving Money on the Table in IPOs?," The Review of Financial Studies, Society for Financial Studies, vol. 15(2), pages 413-444, March.
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