The Impact of Slack Resources on High-Tech IPOs

Authors

  • Fariss-Terry Mousa,

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    • Fariss-Terry Mousa is an assistant professor in the Department of Management, College of Business, 421 Bluestone Drive, Zane Showker Hall 520, MSC 0205, James Madison University, Harrisonburg, VA 22807, USA.
  • Richard Reed

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    • Richard Reed is a professor in the Department of Management and Labor Relations, Nance College of Business Administration, 2121 Euclid Avenue, bu425, Cleveland State University, Cleveland, Ohio 44015-2214, USA.

Please send correspondence to: Fariss-Terry Mousa, tel.: (540) 568-3237; e-mail: mousafx@jmu.edu and to Richard Reed at r.reed68@csuohio.edu.

Abstract

Research on organization slack has focused mainly on its effect in large publicly traded firms, but little work exists on the value of slack resources for other firms. Therefore, here, we address the question: Do slack resources matter in the case of initial public offerings (IPOs)? We argue that firms that possess financial, innovational, and managerial slack resources are sending a positive signal to potential investors regarding the quality of the IPO. Using a sample of high-tech IPOs, we find support for that contention.

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