Founder-CEO Resistance and Ambition: An empirical analysis of firm survival in Japanese junior stock markets

Author Name HONJO Yuji (Faculty Fellow, RIETI) / IKEDA Yuya (National Institute of Science and Technology Policy) / KURIHARA Koki (Chuo University)
Creation Date/NO. June 2024 24-E-060
Research Project Entrepreneurship in high-tech and high-growth start-ups
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This study investigates whether founder-chief executive officer (founder-CEO) presence is associated with initial public offering (IPO) survival. Using 1,393 IPOs listed on Japanese junior stock markets, we examine the impact of founder-CEO presence on the time to involuntary delisting, voluntary delisting, and graduation from junior stock markets. We find that founder-CEO-led firms are less likely to voluntarily delist through mergers and acquisitions (M&A) and buyouts, while they are more likely to graduate to main stock markets than non-founder-CEO-led firms. Our findings suggest that founder-CEOs at the time of the IPO have ambitions to advance the firms beyond the initial IPO, despite their resistance to strategic delisting through M&A. In addition, we find that while younger firms are more likely to delist, regardless of whether the manner is involuntary or voluntary, they are more likely to graduate from junior stock markets. Furthermore, our analyses reveal that firms with CEO retention after the IPO are less likely to delist involuntarily and voluntarily, while they are more likely to graduate from junior stock markets.