Puttin' on the ritz: PRE-IPO enlistment of prestigious affiliates as deadline-induced remediation

Guoli Chen, Donald C. Hambrick, Timothy G. Pollock

Research output: Contribution to journalArticlepeer-review

100 Scopus citations

Abstract

We describe two theoretical explanations for the amount, pace, and costs of the prestige enhancement a firm engages in during the year before its initial public offering. The "snowball model" captures well-known processes whereby prestige-rich organizations accumulate even more prestige. The "dressing-up model" builds upon deadline-induced remediation, a phenomenon not previously studied in a macro-organizational context. In 242 software IPOs, the snowball model substantially explains final-year prestigious hiring. But there is also strong evidence of a tandem dressing-up process. As the final year counts down, prestige-poor firms aggressively hire prestigious executives and directors and pay higher prices to do so.

Original languageEnglish (US)
Pages (from-to)954-975
Number of pages22
JournalAcademy of Management Journal
Volume51
Issue number5
DOIs
StatePublished - Oct 2008

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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