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    Should I stay or should I go? Founder power and exit via Initial Public Offering

    Souitaris, V. and Zerbinati, S. and Peng, Bo and Shepherd, D. (2019) Should I stay or should I go? Founder power and exit via Initial Public Offering. Academy of Management Journal , ISSN 0001-4273. (In Press)

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    Founders can voluntarily exit their ventures via initial public offerings (IPOs). In this study, we build on power theory to develop and test a model of founder exit using a dataset of 313 founders from 177 entrepreneurial IPOs between 2002 and 2010. We largely find support for the model—a negative relationship between founder power and full exit. To capture the underlying mechanism of the power-exit relationship, we conducted two experiments in which we randomly assigned decision makers to either a high- or low-power condition. We find that decision makers in the low-power condition are more likely to use a full exit via IPO than those in the high-power condition and that frustration mediates this relationship. However, founders can also engage in partial exits, including a managerial partial exit in which the founder leaves management but keeps ownership and a financial partial exit in which the founder divests ownership but remains in management. We find that the negative relationship between founder power and exit is more negative for full exits than partial exits. With this paper, we contribute to the literature on exit by identifying a novel mechanism—frustration—underlying power’s influence on the likelihood and type of founder exit.


    Item Type: Article
    Keyword(s) / Subject(s): Topic Areas, Entrepreneurship, Entrepreneurship (General), Topic Areas, Conflict Management, Power/politics, Topic Areas, Business Policy and Strategy, Upper Echelons/Corporate Governance, Executive succession, Topic Areas, Entrepreneurship, Founder characteristics
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Depositing User: Bo Peng
    Date Deposited: 13 Feb 2019 15:50
    Last Modified: 02 Aug 2019 14:54


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