Fariss T Mousa

The Impact of Slack Resources on High-Tech IPOs

Research on organization slack has focused mainly on its effect in large publicly traded firms, but little work exists on the value of slack resources for other firms. Therefore, here, we address the question: Do slack resources matter in the case of initial public offerings (IPOs)? We argue that firms that possess financial, innovational, and managerial slack resources are sending a positive signal to potential investors regarding the quality of the IPO. Using a sample of high–tech IPOs, we find support for that contention.

Top management team and IPO firms’ acquisition activity

Purpose – The purpose of this paper is to explore 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 – The authors collect IPO and TMT data from firm prospectuses, and acquisition and financial data from Securities Data Company Platinum and Compustat, respectively. Poisson regression analysis is applied to test the effect of TMT characteristics on acquisition activity. Findings – Using 135 IPO firms, the authors find evidence that TMT composition directly influences acquisition activity of IPO firms during the post-IPO period. Specifically, the authors 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 ...

The relationship between organizational slack and innovation: revisited

Purpose - – The slack-innovation relationship has interested scholars for years. The authors aim to delve into the impact of financial slack on firm innovation by replicating a classic study arguing that this relationship has an inverse U-shape. Design/methodology/approach - – The sample consists of all US firms that were publicly traded between 1993 and 2011. The authors employ the standard econometrics methodology of panel regression with firm-fixed effect and time-fixed effect to estimate the regression equation of firm innovation on financial slack. Findings - – The authors find that the relationship between financial slack and R&D investments is similar to that suggested by earlier authors, thus enhancing the generalizability of this important finding in management research. The authors also find that this relationship holds even during economic downturns. Originality/value - – The authors replicate Nohria and Gulatis classic study by considering the impact of slack on innovation. The authors also move away from survey data, as used by Nohria and Gulati. The authors utilize actual firm-level data for a large sample of US publicly traded firms from 1993 to 2011, thus enhancing the generalizability of these findings.

INFORMATION DISCLOSURE AND IPO VALUATION: WHAT KINDS OF INFORMATION MATTER AND IS MORE INFORMATION ALWAYS BETTER?

Many financial theories emphasize the positive relationship between information disclosure and firm performance. However, disclosure of information can harm a firm if others make strategic use of the information. In this paper, we test the effect of information disclosure on performance. Using a sample of all firms which went through an IPO in the U.S. during the 2001-2003 period, we examine the relationship between different types of information including 1) the specificity of information, 2) the accuracy of information, and 3) the amount of time for information diffusion and the valuation of the IPO firm. We use OLS regression to predict IPO performance including 1) underpricing, 2) percent premium and 3) 3 year cumulative average adjusted returns. Also, we check for a potential curvilinear relationship between the level of information disclosure and IPO performance. We find a negative relationship between information disclosure and underprcing but a positive relationship with percent premium. The implications of these findings and several directions for future research are discussed as well.