The effect of organizational structure on firm first day underpricing, long-term performance: evidence from U.S. biotech initial public offerings from 1996 to 2004

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The effect of organizational structure on firm first day underpricing, long-term performance: evidence from U.S. biotech initial public offerings from 1996 to 2004

Please use this identifier to cite or link to this item: http://hdl.handle.net/10355/15991

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Title: The effect of organizational structure on firm first day underpricing, long-term performance: evidence from U.S. biotech initial public offerings from 1996 to 2004
Author: Wang, Mingxia
Keywords: organizational structure
m-form
first-day returns
initial public offering
Date: 2012
Publisher: University of Missouri--Columbia
Abstract: This paper investigates the effect of organizational structure on firm first-day return (underpricing), and long-term performance. Using 206 United States biotechnology initial public offerings (IPOs) during 1996 to 2004, we ask whether firms with more divisional organizational structure: Hybrid organizational structure (HYBR) and Pure divisional organizational structure (DVS) perform differently from those with traditional functional organizational structure (FUNC). We find that IPOs with more divisional organizational structure is associated with lower first-day returns (underpricing), with a significant level. We believe that more divisional firms (HYBR and DVS) share more similarity with those of pure M-form. This suggests that there is less information asymmetry for divisional firms, thus associates with lower first-day underpricing. There is no statistically significant relation between organizational structure and firm 3-year long-term performance.
URI: http://hdl.handle.net/10355/15991
Other Identifiers: WangM-071912-T503
Rights: Access is limited to the University of Missouri - Columbia.

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