Abstract
This research examines empirically the role of top management team and board of director characteristics. Top management team has an important role as a primary strategic decision maker in firm. Their actions and characteristics specifically influence the organization’s outcomes. The main duty of board of director is to make sure that managerial decisions are consistent with stockholders goals. One indicator of top management team competence and skill is prestige (D’Aveni, 1990). The uncertainty and information asymmetry surrounding IPO firms, often makes difficulty for potential investors to discern organizational legitimacy and potential firm quality (Lester, et. al., 2006). Research purpose is to investigate the capability of prestigious top management team and board of director at the IPO through a largely symbolic role to enhance organizational legitimacy and give a signaling to potential investor about potential firm in the future. The sample included 59 firms undertaking IPO in JSX during 1999-2006 besides financial firms and web-based firm. Three characteristics: education prestige, previous experience and corporate board experience as indicators of prestigious, this research find that education prestige was positively associated with investor valuations. Otherwise, previous experience and corporate board experience were not associated.
This research examines empirically the role of top management team and board of director characteristics. Top management team has an important role as a primary strategic decision maker in firm. Their actions and characteristics specifically influence the organization’s outcomes. The main duty of board of director is to make sure that managerial decisions are consistent with stockholders goals. One indicator of top management team competence and skill is prestige (D’Aveni, 1990). The uncertainty and information asymmetry surrounding IPO firms, often makes difficulty for potential investors to discern organizational legitimacy and potential firm quality (Lester, et. al., 2006). Research purpose is to investigate the capability of prestigious top management team and board of director at the IPO through a largely symbolic role to enhance organizational legitimacy and give a signaling to potential investor about potential firm in the future. The sample included 59 firms undertaking IPO in JSX during 1999-2006 besides financial firms and web-based firm. Three characteristics: education prestige, previous experience and corporate board experience as indicators of prestigious, this research find that education prestige was positively associated with investor valuations. Otherwise, previous experience and corporate board experience were not associated.
Keywords: top management team, board of director, signaling, information asymmetry, prestige, education prestige, previous experience, corporate board experience, investor valuation.
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