Post-IPO Actions and Firm Survival: More than Signaling?

Entrepreneurial firms, at their birth, have a high probability of failure due to the “liability of newness.” Even firms that surmount the initial challenges and get to the stage of issuing an initial pubic offering (IPO) still face a significant hazard rate. In this paper, we examine whether, in the post-IPO stage, strategic choice matters. We examine whether management actions following an IPO enhance the firm’s survival and, second, if they do, which actions really make a difference. We analyzed a sample of 104 internet-related firms that issued IPOs between 1995 and 1999, and find that management action in three areas - market expansion, entry into alliances, and expansion or reconfiguration of the top management team and/or board of directors - significantly enhance firm survival.