TMT Departures and Post‐IPO Outside Director Additions: Implications for Young IPO Firms’ Survival and Performance

Abstract

We draw on resource‐based logic to argue that relatively stable TMTs and boards are beneficial for young IPO firms because of the need to maintain and develop valuable firm‐specific capabilities and psychological attachment of pre‐IPO TMTs. Using panel data from 272 young IPO firms, we find that pre‐IPO TMT member exits negatively affect young IPO firms’ survival and performance. This negative effect is greater when more post‐IPO outside directors are added. We also find that the above interaction is positively and negatively associated with survival and performance when TMT ownership declines substantially and when firms have a founder CEO, respectively.

Additional information

Notes on contributors

Son Le

Son Le is associate professor at Louisiana Tech University, Management Department, Ruston, Louisiana.

Mark Kroll

Mark Kroll is professor and dean at University of Texas Brownsville, Management, Brownsville, Texas.

Bruce Walters

Bruce Walters is associate professor at Louisiana Tech University, Management Department, Ruston, Louisiana.