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Multinationality and the performance of IPOs

Mudambi, Ram, Mudambi, Susan M., Khurshed, Arif and Goergen, Marc 2012. Multinationality and the performance of IPOs. Applied Financial Economics 22 (10) , pp. 763-776. 10.1080/09603107.2011.626396

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Does multinationality affect the Initial Public Offering (IPO) performance of entrepreneurial firms? Theoretical arguments can be made for a positive effect of multinationality as well as for a negative effect. We examine this question empirically by analysing IPO data for 240 UK firms. We find that multinationality has significant and positive effects on long-run IPO performance. This suggests that the market perceives entrepreneurial firms with multinational activities as possessing unique intangible assets that are indicative of future financial success. Factors affecting the IPO performance also differ systematically between firms with multinational operations and those without multinational operations. Stocks of intangible assets and the quality of the network significantly affect the performance of entrepreneurial IPO firms that ‘go global’. In contrast, domestic IPO firm performance is affected by offer size and underwriters’ perception of firm quality. The findings have important implications for entrepreneurial firms who are making decisions on ‘going global’ and ‘going public’.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HD Industries. Land use. Labor
Uncontrolled Keywords: IPO, venture financing, multinationality, financial performance, entrepreneurship
Publisher: Routledge
ISSN: 0960-3107
Last Modified: 04 Jun 2017 04:08

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