Does Going Public Affect Innovation(3)

completionchoices.Idiscussthisindetailinthenextsection.

TableIalsosummarizes?rmexitsinthe?veyearsfollowingtheIPO?ling.I?ndthat29%ofthewithdrawn?rmsand24%oftheIPO?rmsareacquiredoverthisperiod,withthedi?erencebetweenthetwogroupsinsigni?cant.Only2%ofbothIPOandwithdrawn?rmsgobankrupt.Additionally,18%ofthewithdrawn?rmsultimatelygopublicinasecondattemptinthe?veyearsfollowingtheIPO?ling.

Thesmallfractionofwithdrawn?rmsthatreturntopublicequitymarketsinasecond

Accepted Articleattemptishighlightedintheliterature(DunbarandFoerster(2008),Busaba,Beneviste,andGuo(2001)).SeveralexplanationsexistforthelowfractionofsecondattemptIPOs.ReturningtoIPOmarketsinasecondattemptmaybedi?cultasthewindowofopportunitymayhaveclosedduetotheboomandbustnatureofIPOmarkets(IbbotsonandRitter(1995)).BrauandFawcett(2006)?ndthatthemostimportantsignalwhengoingpublicisa?rm’spasthistoricalearnings.Ifgoingpublicrequiresseveralyearsoffastgrowthtoattractinvestors’attention,suchgrowthmaybedi?culttoreplicateinasecondattempt.DunbarandFoerster(2008)furthersuggestthattherearereputationalcostsassociatedwiththedecisiontowithdraw,whichmayprevent?rmsfromreturningtoequitymarkets.

II.EmpiricalStrategy

A.EmpiricalDesign

Identifyingthee?ectsofgoingpubliconinnovationand?rmoutcomesischallengingdue

toinherentselectionissuesthatarisefromthedecisiontogopublic.ThisconcernisevidentinFigure1,whichpresentswithin-?rmchangesininnovationquality,asmeasuredbyScaledCitations,intheyearsaroundtheIPO.8FirmsexperienceamonotonicdeclineinpatentnoveltybetweenthetwoyearsbeforetheIPOeventandthe?veyearsafter.Duetothechoicetogopublic,post-IPOperformancecouldbedrivenbyreversiontothemeanandlifecyclee?ects,ratherthanthee?ectofbecomingapubliclytraded?rm.

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[INSERTFIGURE1]

Whatisareasonablecounterfactualfor?rmsthatgopublic?Simplycomparingpost-IPOinnovationtoanaverageprivate?rmmaygeneratebiasedestimates,asmostprivatecompaniesarefundamentallydi?erentandnevergopublic.ThisisevidentinTableI,whereonecanseethatpre-?linginnovationqualityof?rmsthatgopublicis80%higherthantheaverageinnovationintherespectivetechnologicalclasses.Toovercomethisconcern,Ifocusonthose?rmsthatsubmitaninitialregistrationstatementtotheSECinanattempttogopublic.

Icomparethelong-runinnovationof?rmsthatgopublicwith?rmsthat?ledtogopublic

Accepted Articleinthesameyearbutultimatelywithdrawtheir?lingandremainedprivate.Thissetupisattractiveasitallowsforcomparisonofthepost-IPOperformanceof?rmsthatgopublicwiththatofprivate?rmsatasimilarstageintheirlifecycle.Thebaselinespeci?cationis

Yipost=α1+β1IPOi+γ1Yipre+Xi??δ1+νk+μt+ε1i,

(1)

whereYipostistheaverageinnovationperformanceinthe?veyearsfollowingtheIPO?ling

(averagescaledcitations,averagescaledoriginality/generality,andaveragescalednumberofpatentsperyear),YipreistheequivalentmeasureinthethreeyearspriortotheIPO?ling,andIPOiisthedummyvariableofinterest,indicatingwhethera?lergoespublicorremains

private.Underthenullhypothesisthatgoingpublichasnoe?ectoninnovation,β1should

notbestatisticallydi?erentfromzero.Thismodelincludesindustry(vk)andIPO?ling

year(μt)?xede?ects.

IfthedecisiontowithdrawanIPO?lingisrelatedtounobservedinnovationpolicyor

innovativeopportunities(capturedintheerrorterm),thenβ1maybebiased.Therefore,IinstrumentfortheIPOcompletionchoiceusingNASDAQreturnsinthe?rsttwomonthsofthebook-buildingphase.Thedecisiontouseatwo-monthwindowissomewhatarbitrary.OnecouldusetheNASDAQreturnsovertheentireperiodofthebook-buildingphase.

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However,sincethelengthofthebook-buildingphaseisoftencorrelatedwiththelikelihoodofwithdrawing,Ichoosea?xedwindowthatissu?cientlyshorterthantheaveragelengthofthebook-buildingperiod.

The?gurebelowillustratesthetimelineoftheIPO?lingandtheNASDAQ?uctuations

Accepted Articleduringthebook-buildingphase.Onaverage,theownershipchoiceismadewithinthefourmonthsfollowingtheIPO?ling.Firm-levelinnovationismeasuredoverthe?ve-yearperiodaftertheIPO?ling.9

Toimplementtheinstrumentalvariablesapproach,Iestimatethefollowing?rst-stage

regression:

IPOi=α2+β2NSDQi+γ2Yipre+Xi??δ2+νk+μt+ε2i,

(2)

whereNSDQiistheinstrumentalvariable.Thesecond-stageequationestimatestheimpactofIPOoninnovationactivity:

??Yipost=α3+β3IPOi+γ3Yipre+Xi??δ3+νk+μt+ε3i,

(3)

??whereIPOiarethepredictedvaluesfrom(2).Iftheconditionsforavalidinstrumentalvariablearemet,β3capturesthecausale?ectofanIPOoninnovationoutcomes.Iimplementtheinstrumentalvariableestimatorusingtwo-stageleastsquares(2SLS).Ialsouseaquasi-maximumlikelihood(QML)Poissonmodeltoestimatethespeci?cation(BlundellandPowell(2004)),whichisthestandardestimationmethodusedinboththeinnovationliteratureandcountdataanalysismoregenerally.

Itisimportanttonotethattheestimatesintheinstrumentalvariablesanalysisare

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comingonlyfromthesensitive?rms(ImbensandAngrist(1994)).Inotherwords,theestimatesarecomingonlyfromthose?rmsthatwouldaltertheirIPOcompletiondecisioniftheyexperienceaNASDAQdrop,andthereforearesensitivetochangesintheinstrument.IntheInternetAppendixIprovideasimpleexampletoillustratethispoint.InthenextsectionIdiscusstheassumptionsthatneedtoholdfortheinstrumenttobevalid.

Accepted ArticleB.NASDAQFluctuationsandIPOCompletion

Fortheinstrumenttobevalid,itmuststronglya?ectIPOcompletionchoice.Indeed,

issuersarehighlysensitivetostockmarket?uctuationsduringthebook-buildingphase(Benvenisteetal.(2003),Busaba,Benveniste,andGuo(2001),Dunbar(1998),DunbarandFoerster(2008),EdelenandKadlec(2005)).ThissensitivityisalsoillustratedinFigure2,whichplotsthefractionofmonthly?lingsthatultimatelywithdrawagainstthetwomonthsofNASDAQreturnscalculatedfromthemiddleofeachmonth,wh …… 此处隐藏：6587字，全部文档内容请下载后查看。喜欢就下载吧 ……