PhD Defence: Mahdi Shahriari

Abstract

This dissertation explains why some fast-growing companies disappoint investors and fall sharply after going public, while others grow into Amazon-like success stories.

The main idea is that very fast growth can create very high expectations. Before an IPO, investors often see rapid growth as a sign that the company has huge potential. But after the IPO, growth often becomes harder to maintain. If the company cannot keep growing as fast as people expected, investors may become disappointed, even if the company is still healthy and doing well.

The dissertation studies U.S. companies that went public and shows three main findings. First, companies with a strong high-growth image often perform worse in the stock market over the long term than similar companies without that image. Second, there is no single best strategy after an IPO. Some firms should keep pushing for sales growth, while others should focus more on profitability. The right choice depends on how much money the firm has, how scalable its business model is, and how uncertain the market is. Third, the way firms tell their story in IPO documents also matters. When companies strongly suggest that their success comes from their own unique capabilities, investors may expect that success to continue, which can make later disappointment stronger.

Overall, the dissertation shows that growth is not only about performance. It is also about expectations. To succeed after an IPO, fast-growing firms need to manage not only what they do, but also what investors believe they can realistically deliver.