Entrepreneurial identity and strategic disclosure: FounderCEOsand new venture media strategy

Research Summary New venture leaders play a key role in crafting media communications to best represent the firm to the outside world. These decisions and behaviors have critical implications for performance. Building on entrepreneurial identity and strategic disclosure research, we explore the interplay between founder CEOs and firm media strategy in their effects on IPO. We use natural language processing and textual analysis on a sample of 76,883 press releases, providing insights into the media communications of founder CEOs of 2,276 US VC backed high-technology firms during the period from 1985 to 2009. Results suggest that greater volume and use of positive terms in media statements positively mediate the effects of founder CEOs, increasing the likelihood of firm IPO. Our findings offer important contributions to entrepreneurship research. Managerial Summary The purpose of this article is to explore how new venture leaders may influence the external representation of their startups and subsequently impact performance outcomes such as IPO. Specifically, we examine differences between founder CEOs and professional CEOs in how they personally identify with the venture, portray the venture in the media, and thus affect the likelihood of the venture going public, being acquired, or being liquidated. Through analysis of press release statements of VC-backed high-technology startups, we find that startups with founder CEOs issue more press release statements, incorporate more positive language in these statements, and have a higher likelihood of IPO than those with professional CEOs. These results imply that the media strategy of founder CEOs may be more beneficial for new ventures.