How founders can indirectly market firm value to investors during the IPO process

What is it about?

This paper explores how founder-led firms can indirectly communicate and market the firm's value to investors during the IPO process. Using amendments to the firm’s S-1, the document filed to announce the firm’s IPO intent, we identify when firms are more or less likely to use amendments as signals to investors, and how these signals impact the firm’s performance at IPO.

Featured Image

Why is it important?

During the IPO process, a company goes through a “quiet period” as once a company files registration paperwork with U.S. regulators, the executives of the firm cannot directly speak to the public about the business until 40 days after the stock starts trading. We identify an indirect means of communication, the S-1A, that founders can use to promote the value of the firm to investors. This will help increase the value of the IPO which benefits investors, underwriters, founders and other stakeholders of the firm.