Abstract
The divergence between stated plans and actual behavior of IPO firms is an important theoretical and practical issue. Focusing on internal governance characteristics of such firms, we explore how a plan stated pre-IPO influences actual post-IPO behavior. Using data on Japanese firms that went public between 2010 and 2019 and performing hierarchical multiple regression analyses of these data, we find that firms generally allocate proceeds to investment as planned, even post-IPO. However, we also find that the involvement of entities with short time horizons (VCs) or a lack of ability to execute the plan (less legitimate TMTs) may change or terminate the pre-IPO plan for investment. Thus, we conclude that the internal governance characteristics of IPO firms affect the relationship between firms’ plans stated pre-IPO and their actual post-IPO behavior, which has implications for firms aiming to grow through IPO funding.