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Founder retention as CEO at IPO in emerging economies: the role of private equity owners and national institutions

Founder retention as CEO at IPO in emerging economies: the role of private equity owners and national institutions
Founder retention as CEO at IPO in emerging economies: the role of private equity owners and national institutions
We integrate the institutional perspective with research on the governance role of private equity firms in an investigation of Founder-CEO successions in Initial Public Offerings (IPOs) in emerging markets. Using a unique, hand-collected and comprehensive sample of 191 firms having undertaken IPOs in 21 markets across the African continent between January 2000 and August 2016, we apply instrumental variable (IV) Probit methodology and find that higher levels of
private equity ownership are positively associated with the probability of the founder's retention as CEO, especially in the context of low-quality formal institutions. Further, in societies with high tribalism, higher private equity ownership is associated with an increased likelihood of founder retention. Voids in the institutional architecture underscore the importance of the founder as a
key organizational resource for the firm and a source of institutionalized legitimacy, which in turn confers on the firm an ability to access required resources.
IPO, Africa, Founder CEOs, Institutions, Entrepreneurship
0883-9026
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2

Hearn, Bruce (2019) Founder retention as CEO at IPO in emerging economies: the role of private equity owners and national institutions. Journal of Business Venturing. (doi:10.1016/j.jbusvent.2019.01.007).

Record type: Article

Abstract

We integrate the institutional perspective with research on the governance role of private equity firms in an investigation of Founder-CEO successions in Initial Public Offerings (IPOs) in emerging markets. Using a unique, hand-collected and comprehensive sample of 191 firms having undertaken IPOs in 21 markets across the African continent between January 2000 and August 2016, we apply instrumental variable (IV) Probit methodology and find that higher levels of
private equity ownership are positively associated with the probability of the founder's retention as CEO, especially in the context of low-quality formal institutions. Further, in societies with high tribalism, higher private equity ownership is associated with an increased likelihood of founder retention. Voids in the institutional architecture underscore the importance of the founder as a
key organizational resource for the firm and a source of institutionalized legitimacy, which in turn confers on the firm an ability to access required resources.

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More information

Accepted/In Press date: 16 January 2019
e-pub ahead of print date: 23 February 2019
Keywords: IPO, Africa, Founder CEOs, Institutions, Entrepreneurship

Identifiers

Local EPrints ID: 428818
URI: https://eprints.soton.ac.uk/id/eprint/428818
ISSN: 0883-9026
PURE UUID: 367bef24-d584-4fd5-9a9d-b40dd81f0161
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

Catalogue record

Date deposited: 11 Mar 2019 17:30
Last modified: 14 Mar 2019 01:22

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