Lets (Not?) Hang Out! Examining the Exit of Prestigious Directors from Newly Public Firms


Abhijith Holehunnur
  • Speaker
SMEAL College of Business, Pennsylvania State University

Event Information

Type
Research Seminar
Programme
Strategy & Entrepreneurship
Date
Mon. 3 Dec. 2012
Contact
Pursey Heugens
Time
13:00-14:30 hours
Location
C2-1


Abstract

This study examines prestigious directors’ decision to continue on or exit from newly public firms’ boards with few, if any, other prestigious directors. Drawing on the literatures on status homophily and social identity theory, I theorize that a decrease in the level of status homophily, reflected in the level of pre-exiting board prestige, will differentially affect directors’ exit decisions such that high-status or prestigious directors are more likely to exit the boards than lower status or non-prestigious directors. Further, I propose that prestigious directors’ ability to influence firm outcomes and desire to maintain social ties with incumbent directors are likely to temper the importance of serving with directors of similar status, and in turn motivate them to continue serving on boards despite a decrease in status homophily. I test these arguments using data from five-year, pooled cross sectional sample of 424 firms that went public between 2001 and 2005. 

Pursey Heugens
Professor of Organization Theory, Development, and Change, Scientific Director ERIM, Dean of Research RSM
  • Coordinator
Justin Jansen
Professor of Corporate Entrepreneurship
  • Coordinator