Managerial prestige and post-IPO firm performance: a partially mediated model

The role of top managers in shaping the performance of the firms that employthem represents a central issue to strategic management research. Indeed, a substantialamount of research has examined potential linkages between the characteristics of topmanagers and firm performance. However the empirical results of research in this areahave been ambiguous. This study attempts to theoretically and empirically extendresearch on the influence of top managers on firm performance by examining therelationship between managerial prestige and firm performance in the post-IPO context.Although upper echelons researchers have attempted to link top managers withfirm performance in the past recent reviews of the upper echelons research note that littleattention has been paid to top management characteristics other than those of topmanagement team (TMT) heterogeneity, TMT size and TMT tenure. Additionally,recent reviews also suggest the need to consider potential intervening mechanismsbetween TMT characteristics and firm performance. This study addresses these twolimitations of prior upper echelons research by examining the direct and indirectinfluences of managerial prestige on post-IPO firm performance.In this study I develop a model which incorporates the resource based view andresource dependence theory with insights from upper echelons research and research onthe IPO context. Results for the model developed in this study suggest the following.First, executive undergraduate prestige is positively related to post-IPO firm growth.The other aspects of managerial prestige examined in this study were not found toinfluence post-IPO firm performance. Second, the influence of the key external resourceholders identified in this study, namely prestigious alliance partners and institutionalinvestors with stable equity portfolios, were found to enhance firm survival rates, butwere negatively associated with firm growth. Third, executive undergraduate prestigewas found to garner the support of prestigious alliance partners. The remaining aspectsof managerial prestige were not found to influence the support of prestigious alliancepartners or dedicated institutional investors. Finally, no support was found forprestigious alliance partners and dedicated institutional investors as mediators of therelationship between managerial prestige and post-IPO firm performance.