Impact of Charismatic Leadership and Market Shares on IPO First-Day Returns: The Case of Technology Firms

摘要

First-day returns of initial public offerings (IPOs) have always been an important topic in academic research. Previous literature generally attributes the first-day return of an IPO to the underpricing of the stock, and most studies emphasize on the market-level factors such as the hot market influence and people’s pursuit over IPOs based on the pre-selling market return data. Firm-level variations, on the other hand, are generally under investigated. This research investigates the variations across companies by focusing on two factors that previous studies have not fully articulated: charismatic leadership and market shares. Using logistic regression analysis and a sample of 92 firms in technology industries that went public in the USA during the period from 1 January 2012 to 31 December 2014, we find that there is a statistically significant and positive relationship between charismatic leadership and first-day returns of IPOs, as well as between market shares and first-day returns of IPOs. Our study contributes to the IPO performance literature, and it provides practical implications on IPO management and investment.