The Impact of Founder-CEO Presence upon Post-IPO Firm Failure : Contingency Approach

This study looks at how internal and external contingencies can moderate the impact of founder-CEO presence when firms are faced with a transitional challenge after IPO. Whereas founder-CEO can act as a transformational shield when his presence is supported by strong founder ownership, legitimacy or older firm age (thus longer tenure), founder can also become a transitional obstacle when firm size is big enough to outgrow his managerial capabilities. The hypotheses were tested by tracking a sample of 211 firms that went public in Korea during 1999～2000. Bigger founder ownership and founder legitimacy interacted with founder presence to significantly lower the likelihood of firm failure, whereas bigger firm size interacted with founder presence to increase the likelihood.