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UBC Theses and Dissertations

Mapping risk, strategy, and performance in IPO organizational knowledge structures Martens, Martin L.

Abstract

In this dissertation I investigate initial public offering prospectuses to examine institutionalized outcomes about risk and strategy and test whether information about those outcomes can be used to predict firm performance. I use three conceptual perspectives—managerial risk, New Institutional theory, and Organizational Cognition—to explore these outcomes in the main body of this thesis. The main body contains four articles that, although connected by a common thread, are designed as independent standalone papers. In Chapter 2 I examine the risk factor section of 529 prospectuses from firms that went public of US stock exchanges in 1995 and 1996. Using this data I create a comprehensive content cognitive map of 98 risk factors at represent the content of IPO field's risk knowledge structure. I then identify three methods for measuring these risk factors—pervasiveness, priority, and proportion. Following this I examine how the IPO field structures the risk knowledge structure. In Chapter 3 I use the content map developed in Chapter 2 to test whether I can use this information to predict firm performance. Using the IPO data, I develop several risk measures and compare these to existing proxy measures. I then use multiple regression analyses to test the reliability and validity of the various measures. The final result is a risk factor measure, the BROAD measure, which produced the most consistent results. In Chapter 4 I expand the investigation by examining'how firms and fields make sense of strategy and how it relates to the risk factors. In this chapter I compare three fields with differing" levels of institutionalization to see whether I can find unique institutionalized outcomes—industry recipes—about risk and strategy. In this Chapter I find strong support for the idea that fields have distinctive industry recipes. The results show that the dynamics of these industry recipes differ according to the level and type of institutionalization. Finally, in Chapter 5 I test firm level cognitive maps against the field level industry recipes to examine whether conformity, convergence, or divergence matter to IPO performance. There is some support for the idea that firm conformity to an industry recipe improves firm performance. Additionally, in some institutional conditions, convergence toward an industry recipe also improves IPO performance.

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