Signaling Corporate Strategy in IPO Communication: A Study of Biotechnology IPOs on the NASDAQ

Jenny Darroch · Damien Mather

115 citations0/0 files storedJournal of Business Communication

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Corporate Finance and Governance Financial Markets and Investment Strategies Auditing, Earnings Management, Governance

Abstract

A clear corporate strategy communication can be a signal to financial analysts and public investors at the time of an initial public offering (IPO). This study examines IPO prospectuses of 57 biotechnology firms listed on the NASDAQ between 1997 and 2002. Using regression analysis, this article shows that the clarity, intensity, and consistency of the corporate strategy signal are not strong enough to affect the 1st-day initial returns. However, consistent communication of a prospector strategy negatively impacts 30-day initial returns, whereas consistent communication of a defender strategy positively impacts 30-day initial returns.

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References

1973Job Market Signaling 2017The Content Analysis Guidebook 1978Organizational Strategy, Structure, and Process 1991The Long‐Run Performance of initial Public Offerings 1986Investment banking, reputation, and the underpricing of initial public offerings 2002A Review of IPO Activity, Pricing, and Allocations 2002Signaling in Retrospect and the Informational Structure of Markets 1991Venture Capitalist Certification in Initial Public Offerings

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