Dissertation
When do slack resources impact new venture success?
Washington State University
Doctor of Philosophy (PhD), Washington State University
05/2009
DOI:
https://doi.org/10.7273/000005850
Abstract
A significant body of research exists on organizational slack in large publicly traded firms. Little work exists on the value of slack resources for younger firms. Using a unique sample of high-tech, initial public offerings (IPOs), this dissertation examines how slack resources affect the short- and long-term success of these firms. Financial and non-financial data are collected from IPO prospectuses. I argue and test the relationship using partial hierarchical regression analysis that firms that possess financial, innovational, and managerial slack resources provide a signal to potential investors regarding the quality of the IPO. The results provide evidence that slack resources increase IPO value and percent premium paid. I also estimate the semiparametric Cox Proportional Hazards model to test whether slack resources significantly impact the probability of post-IPO survival. I find that the probability of post-IPO survival increases with pre-IPO working capital and R&D-investment slack. For practitioners, the most important implication is that certain types of slack resources are essential for the success of startup firms. Some key findings include: a strong financial position and sufficient managerial talent and expertise at the time of the IPO were found to be vital for achieving high valuation. While, for the long run, leading one s industry in investments in research and development (R&D) is essential to the survival of post-IPO firms. For research, the most important findings are IPO firm-specific slack resources may act as a signal of quality, different forms of slack resources (financial, innovational, and managerial) are vital to short- and long-term success, investors place considerable value on slack resources, and a deeper understanding of the behavior of slack resources in a unique setting.
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Details
- Title
- When do slack resources impact new venture success?
- Creators
- Fariss-Terry Mousa
- Contributors
- Richard Reed (Chair)Jonathan D Arthurs (Committee Member)Min-Chiang Wang (Committee Member) - Washington State University, Conversion (Inactive)
- Awarding Institution
- Washington State University
- Academic Unit
- Carson College of Business
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 163
- Identifiers
- 99901055038801842
- Language
- English
- Resource Type
- Dissertation