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Information diffusion and value redistribution among transaction partners of the IPO firm
Author(s) -
Liu Kun,
Arthurs Jonathan D.,
Nam Daeil,
Mousa FarissTerry
Publication year - 2014
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.2176
Subject(s) - initial public offering , database transaction , valuation (finance) , business , uniqueness , transaction cost , stock (firearms) , microeconomics , information asymmetry , economics , industrial organization , finance , computer science , mathematics , mechanical engineering , mathematical analysis , engineering , programming language
This paper examines the diffusion of information around the initial public offering ( IPO ) process and identifies transaction partners on which IPO firms are dependent. Using a resource payments perspective, we argue that this dependence will lead to greater cumulative abnormal stock returns for transaction partners when this information is revealed in the market (when the initial form S‐1 is filed with the SEC ). Moreover, we examine the uniqueness of the resource configuration between the IPO firm and transaction partners and find that greater uniqueness is associated with higher valuation for these transaction partners. We also find that multiple dependencies (by the IPO firm) reduce the valuation effect for transaction partners, indicating that a bargaining effect reduces the potential value that any transaction partner can appropriate . Copyright © 2013 John Wiley & Sons, Ltd.