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The impact of private equity ownership and institutions on founder retention as CEO at IPO in emerging economies

The impact of private equity ownership and institutions on founder retention as CEO at IPO in emerging economies
The impact of private equity ownership and institutions on founder retention as CEO at IPO in emerging economies
This study examines the influence of private equity retained ownership post-IPO in influencing whether the founder entrepreneurial CEO secedes at IPO. Using a unique sample of 136 private sector IPO firms from over 17 African equity markets between 2000 and 2014 we find that both Business Angel (BA) and Venture Capital (VC) retained ownership is associated with increased likelihood that founder is retained at IPO event. This is inversely moderated by formal institutional quality. We argue that in dense network political economies where relational governance is necessitated then private equity entities are more supportive of founder retention at IPO given the importance of founder’s social networks, capital and reputation in securing access to critical resources and information ensuring survival of firm. In high quality contracting environments there is relatively less importance in founder skills and attributes and a greater emphasis of the IPO marking a transition into professionalized management – thereby stimulating a succession event of founder as CEO.
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2

Hearn, Bruce (2016) The impact of private equity ownership and institutions on founder retention as CEO at IPO in emerging economies. In Academy of International Business Annual Meeting, New Orleans, USA.

Record type: Conference or Workshop Item (Paper)

Abstract

This study examines the influence of private equity retained ownership post-IPO in influencing whether the founder entrepreneurial CEO secedes at IPO. Using a unique sample of 136 private sector IPO firms from over 17 African equity markets between 2000 and 2014 we find that both Business Angel (BA) and Venture Capital (VC) retained ownership is associated with increased likelihood that founder is retained at IPO event. This is inversely moderated by formal institutional quality. We argue that in dense network political economies where relational governance is necessitated then private equity entities are more supportive of founder retention at IPO given the importance of founder’s social networks, capital and reputation in securing access to critical resources and information ensuring survival of firm. In high quality contracting environments there is relatively less importance in founder skills and attributes and a greater emphasis of the IPO marking a transition into professionalized management – thereby stimulating a succession event of founder as CEO.

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More information

Published date: 20 July 2016
Venue - Dates: AIB 2016 Annual Meeting, New Orleans, United States, 2016-06-27 - 2016-06-27

Identifiers

Local EPrints ID: 423315
URI: https://eprints.soton.ac.uk/id/eprint/423315
PURE UUID: 821a8bca-a181-4512-901d-fb99e95e4abe
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

Catalogue record

Date deposited: 20 Sep 2018 16:30
Last modified: 14 Mar 2019 01:22

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