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Legitimacy signals and family IPO performances

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  • Hung-bin Ding
  • Kuntara Pukthuanthong

Abstract

The objective of this research is to examine the relationship between signals including governance and management practices and the performance of family firms IPOs. Using IPO data of 129 family firms and 129 comparable non-family firms from the Taiwan Stock Exchange, our findings highlighted the role of non-family insiders, or non-family affiliated directors in the IPOs of family firms. Our comparison between family and non-family IPOs shows hiring prestigious underwriters significantly improves the performance of family firm IPOs. Finally, we found the industries of IPO firms moderate the relationship between corporate governance characteristics and IPO performances, as non-family firms in technology industries are perceived to be more legitimate than their family counterparts. This paper makes three contributions to existing research. Firstly, we contribute to the legitimacy theory by suggesting an interaction effect between internal (organizational) and external (environmental) factors. Secondly, our analysis highlighted the roles of affiliated directors and industry in the performances of public family firms. Thirdly, this study contributes to the family business research by underscoring the differences between family and non-family firms in the IPO context.

Suggested Citation

  • Hung-bin Ding & Kuntara Pukthuanthong, 2013. "Legitimacy signals and family IPO performances," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(1), pages 156-181, February.
    • Handle: RePEc:taf:jbemgt:v:14:y:2013:i:1:p:156-181
    DOI: 10.3846/16111699.2012.711359
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    References listed on IDEAS

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    1. Sarchizian Sergiu, 2010. "International Corporate Governance in Globalisation Context," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 705-708, October.
    2. E. Han Kim & Woochan Kim, 2008. "Changes in Korean Corporate Governance: A Response to Crisis," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(1), pages 47-58, December.
    3. International Finance Corporation & OECD, 2009. "Practical Guide to Corporate Governance," World Bank Publications - Reports 28085, The World Bank Group.
    4. D. Alba, Joseph & Park, Donghyun & Wang, Peiming, 2010. "Corporate Governance and Foreign Direct Investment," ADB Economics Working Paper Series 202, Asian Development Bank.
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    Cited by:

    1. Fabrizio Zerbini, 2017. "CSR Initiatives as Market Signals: A Review and Research Agenda," Journal of Business Ethics, Springer, vol. 146(1), pages 1-23, November.
    2. Carbone, Emmadonata & Cirillo, Alessandro & Saggese, Sara & Sarto, Fabrizia, 2022. "IPO in family business: A systematic review and directions for future research," Journal of Family Business Strategy, Elsevier, vol. 13(1).
    3. Zattoni, Alessandro & Witt, Michael A. & Judge, William Q. & Talaulicar, Till & Chen, Jean Jinghan & Lewellyn, Krista & Hu, Helen Wei & Gabrielsson, Jonas & Rivas, Jose Luis & Puffer, Sheila & Shukla,, 2017. "Does board independence influence financial performance in IPO firms? The moderating role of the national business system," Journal of World Business, Elsevier, vol. 52(5), pages 628-639.
    4. Hanqing “Chevy” Fang & Kulraj Singh & Taewoo Kim & Laura Marler & James J. Chrisman, 2022. "Family business research in Asia: review and future directions," Asia Pacific Journal of Management, Springer, vol. 39(4), pages 1215-1256, December.
    5. Emmadonata Carbone & Riccardo Vigano, 2023. "IPO Timing in Family and Non-Family Firms: Investigating the CEO’s Characteristics Role," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(3), pages 1-78, June.

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