FINANCIAL WEALTH, SOCIOEMOTIONAL WEALTH, AND IPO UNDERPRICING IN FAMILY FIRMS: A TWO-STAGE GAMBLE MODEL

• 成果类型: Article
• 署名作者: Kotlar, Josip; Signori, Andrea; De Massis, Alfredo; Vismara, Silvio
• 署名单位: Lancaster University; Catholic University of the Sacred Heart; Free University of Bozen-Bolzano; Free University of Bozen-Bolzano; Lancaster University; University of Bergamo
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• DOI: 10.5465/amj.2016.0256
• 发表日期: 2018
• 页码: 1073-1099
• 关键词: initial public offerings; loss aversion; BEHAVIORAL AGENCY; prospect-theory; Ownership structure; experimental tests; MARKET; governance; valuation; performance

摘要

There are competing theoretical explanations and conflicting empirical evidence for the initial public offering (IPO) underpricing phenomenon in family firms. The behavioral agency model predicts that loss-averse family firms discount their shares more than nonfamily firms to minimize losses of socioemotional wealth (SEW). Conversely, the endowment effect in prospect theory suggests that family owners maximize their financial wealth (FW) by including SEW in perceptions of firm value and demanding a higher IPO price to relinquish it. We reconcile these seemingly incompatible predictions by examining dynamic properties of the reference point in decision framing. Conceiving IPO pricing as a two-stage gamble, we theorize that initial SEW losses entailed by the listing decision increase the disposition of family owners to underprice IPO shares to possibly offset these losses, or break even. We thereby advance the behavioral agency model with the aversion to loss realization logic to explain how family owners' decision frames and preferences change during the IPO process, depending on initial losses of current SEW and new expectations of future SEW. Our analysis of 1,807 IPOs in Europe supports our theoretical expectations, clarifying the trade-off between FW and SEW and explicating the dynamic properties of mixed gambles in family firms.