Signaling Corporate Strategy in IPO Communication: A Study of Biotechnology IPOs on the NASDAQ

Authors

Hongzhi Gao, University of Otago
Jenny Darroch, Claremont Graduate UniversityFollow
Damien Mather, University of Otago
Alan MacGregor, University of Otago

Document Type

Article

Department

Drucker School of Management (CGU)

Publication Date

2008

Disciplines

Business | Business and Corporate Communications | Marketing

Abstract

A clear corporate strategy communication can be a signal to financial analysts and public investors at the time of an initial public offering (IPO). This study examines IPO prospectuses of 57 biotechnology firms listed on the NASDAQ between 1997 and 2002. Using regression analysis, this article shows that the clarity, intensity, and consistency of the corporate strategy signal are not strong enough to affect the 1st-day initial returns. However, consistent communication of a prospector strategy negatively impacts 30-day initial returns, whereas consistent communication of a defender strategy positively impacts 30-day initial returns.

Rights Information

© 2008 Association for Business Communication

DOI

10.1177/0021943607309349

Recommended Citation

Gao, H., Darroch, J., MacGregor, and Mather, D., “Signaling corporate strategy in IPO communication: A study of biotechnology IPOs on the NASDAQ,” Journal of Business Communication 45, no. 1 (2008), pp. 3-30. doi: 10.1177/0021943607309349