Keywords

IPO, entrepreneurial finance, impression management, corporate governance, camouflage, underpricing

Abstract

Entrepreneurs attempt to persuade potential investors that their new ventures are both credible andworthy of funding. A long line of research on entrepreneurial impressionmanagement establishes that the ability to present their ventures in a favorable light is a key attribute of successful entrepreneurs. In this study, we examine the opposite side of the issue and test to determine if some entrepreneurs obscure corporate governance information.We create a newmetric tomeasure the level of camouflage used in governance documents for initial public offerings (IPOs). We find that entrepreneurs are less likely to use camouflage during periods of high scrutiny, as measured by industry analyst following, industry concentration levels, and IPO clustering. We also find that greater use of camouflage is associated with raising more capital, due to both greater offer proceeds as well as less underpricing. This effect is most pronounced in corporate charters which are difficult for shareholders to change.

Original Publication Citation

Strategically Camouflaged Corporate Governance in IPOs: Entrepreneurial Masking and Impression Management, with Dave Benson, Jim Cicon and Steve Ferris, Journal of Business Venturing, Vol. 30, Iss. 5, November 2015, 839-864.

Document Type

Peer-Reviewed Article

Publication Date

2015

Publisher

Journal of Business Venturing

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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