The purpose of this research is to apply a conceptual framework to questions of how, why, and when founders participate in the firms that they establish and to empirically test for the persistent influence of the founder on the firm after start-up. A definition of the term ‘founder’ is proposed. Empirical tests compare firms with founder CEOs to those with nonfounder CEOs to determine whether governance and ownership relationships are distinguishable at initial public offering (IPO). In addition, investor reaction to founder-led firms at IPO is tested. Results suggest that founder influence does persist in governance and ownership arrangements and that the stock market reaction to founder-led firms is higher than for the comparison group, relative to accounting value. Copyright © 2003 John Wiley & Sons, Ltd.