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Signaling Organizational Virtue: an Examination of Virtue Rhetoric, Country-Level Corruption, and Performance of Foreign IPOs from Emerging and Developed Economies


Correspondence to: Curt B. Moore, Area of Management, Rawls College of Business, Texas Tech University, MS 2101, Lubbock, TX 79409, U.S.A. E-mail:


Extending signaling theory by discussing rhetoric in terms of cost and observability, we examine the relationship between organizational virtue rhetoric in prospectuses and the performance of foreign IPOs from 35 different countries. We also explore how the nature of this relationship is contingent upon the level of perceived corruption for each IPO firm's home country, a pervasive and costly problem for emerging economy countries due to its impact on economic growth and national governance. Our results indicate that signaling organizational virtue in prospectuses leads to higher levels of foreign IPO performance, which is positively moderated by perceived home country corruption. Copyright © 2013 Strategic Management Society.