A Temporal Agency Model of Investor Group Dynamics

Publication: Scientific journalJournal articlepeer-review


In this article, we contribute to, and extend, multiple agency theory through investigations beyond dichotomous agency relationships. As such, we examine temporal interests among principals, and propose faultlines as a novel approach to capture full agency dynamics, conflicts and costs. We test our model in the empirical setting of foreign and domestic firms undergoing an initial public offering (IPO) in the US, and explain incentives of public market investors to price investor faultlines in public equity markets. Within this framework, we distinguish dormant from active faultlines, and describe their activation course through the triggering event of IPO lockup expiration. We find evidence that faultlines negatively affect post-IPO stock market performance, with foreign firms driving this negative effect. We further investigate the contingency of firm foreignness, and uncover geographic dispersion among principals to heighten perceptions of faultlines. Moreover, we find firms operating in high technology markets to weaken, and increased ownership retention by directors and executives to strengthen, investor faultlines perceived by public market investors.
Original languageEnglish
JournalAcademy of Management Proceedings
Issue number1
Publication statusPublished - 2021

Austrian Classification of Fields of Science and Technology (ÖFOS)

  • 211903 Science of management
  • 502003 Foreign trade
  • 502

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