Does Going Public Affect Innovation(7)

private?rms(seetheInternetAppendix).I?ndthatevenVCownedprivatecompaniescon-ductsigni?cantlyhigherqualityinnovationintheyearsfollowingtheIPOrelativeto?rmsthatgopublic.Moreover,inventorsinsuchprivate?rmsaresigni?cantlylesslikelytoleave.Thisevidencesuggeststhatprivate?rmsdonotoverinvestininnovation,asconjecturedbytheexcessiveinnovationhypothesis,ascompaniesthatarelikelytosu?ertheleastfromagencyproblemsproducehigherqualityinnovation.

B.2.

Agency-FreeHypothesis

Accepted ArticleCantheagency-freehypothesisexplaintheresults?Ifimprovedaccesstocapitalallows

?rmstofocusoncommercialization,leadinginturntoadeclineininnovationquality,thensuchadeclineshouldbelessapparentin?rmsthatalreadyhavesigni?cantresourcesatthetimeoftheIPOorthatraiselittlecapitalthroughtheIPO.Such?rmsmaybethelargest?rmsthatgopublic,?rmswithhighcashrelativetoassetsatthetimeoftheIPO,and?rmsthatraisetheleastcapitalthroughprimaryshares.Suchadeclineshouldalsobelessapparentin?rmsthatfacelowercommercializationcosts,suchas?rmsinthesoftwareandservicesindustries.Toexaminethee?ectoftheIPOoneachofthesegroups,Irepeatthemaininstrumentalvariablesapproach,andreporttheresultsintheInternetAppendix.InallcasesIstill?ndasigni?cantdeclineininnovationquality.Whilethisevidenceisnotconclu-sive,itsuggeststhattheaccesstocapitalandpotentialabilitytopursuecommercializationafteranIPOdoesnotexplainthedeclineininnovationquality.

Inlightofevidenceintheliteraturethatinnovationiseconomicallyimportant(e.g.,Hall,

Ja?e,andTrajtenberg(2005),Koganetal.(2012)),itmaybesurprisingif?rmschoosenottopursueinnovationaftertheIPO.33Forexample,Koganetal.(2012)?ndthathigh-qualityinnovationpredicts?rmproductivityaswellascapitalandlabor?owsfromnon-innovativetoinnovative?rmswithinanindustry.Moreover,inthe“useofproceeds”sectionintheIPO?lingprospectus,I?ndthat75%of?rmsstatethattheyalsointendtouseproceedsfromtheIPOfortechnologicaldevelopmentandinnovation.34WhenIrepeatthemaininstrumental

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variablesstrategyrestrictingthesampleto?rmsthatstateanintentiontoinnovate,asreportedintheInternetAppendix,I?ndasimilardeclineininnovationqualitysimilartothemain?ndings.35

B.3.

CareerConcernsandQuietLifeHypotheses

Accepted ArticleInlightoftheaboveevidence,Inextconsiderwhetherpubliclytraded?rmsunderinvest

ininnovationduetoagencyproblemsthatarisebetweenmanagementandshareholders.Consistentwiththemainresults,boththequietlifeandcareerconcernshypothesessuggestthatinnovationwilldeclinefollowingtheIPO.However,thesehypotheses,yielddi?erentpredictionswheninteractedwithmanagerialentrenchment.Managerialentrenchmentmayimproveinnovationunderthecareerconcernshypothesisbutdecreaseinnovationunderthequietlifehypothesis.Thesecontrastinge?ectsofmanagerialentrenchmentarediscussedbyFismanetal.(2013).

Iexploretheinteractionofgoingpublicwithmanagerialentrenchmentinane?ortto

distinguishbetweenthesetwohypotheses.Asaproxyformanagerialentrenchment,IuseadummyvariablethatcapturescasesinwhichtheCEOisalsothechairmanoftheboard(ShleiferandVishny(1989)).IhandcollectthisinformationfromIPOprospectuses.IntheInternetAppendix,Irepeatthemaininstrumentalvariablesanalysistoexaminethee?ectoftheIPOon?rminnovationseparatelyforentrenchedandnon-entrenchedCEOs.I?ndthat?rmswithnon-entrenchedmanagersexperienceasigni?cantdeclineininnovationqualityfollowingtheIPO,andinventorsofthese?rmsaremorelikelytoleave.Incontrast,suche?ectsdonotholdfor?rmswithentrenchedmanagement.Theseresultssupportthecareerconcernshypothesis.

C.Discussion

Overall,thissectiono?erssuggestiveevidencethatagencyproblemsbetweenmanage-

mentandshareholders,intheformofcareerconcerns,leadpubliclytraded?rmstopursue

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lowerqualityinnovation.Theseresultsareconsistentwithrecentevidencethatexploresagencyproblemsinpublicequitymarketsinvarioussettings.36Forexample,Gao,Harford,andLi(2014)?ndthatpublic?rmsaremorelikelytoreplaceaCEO,relativetoprivate?rms,andthatsucheventsaremoresensitiveto?rmcontemporaneousperformance.Moreover,performancefollowingCEOdepartureismoremodestinpublic?rms.Related,Aghion,VanReenen,andZingales(2013)?ndthatinstitutionalinvestorsinpublic?rmsleadtomoreinnovation,andthelikelihoodofCEOturnoverfollowingarevenuedropislowerfor?rmswithgreaterinstitutionalownership.Thesepapersareconsistentwithcareerconcerns,whichmayleadmanagerstoselectmoreincrementalandlessriskyprojects.

Ifthepaper’smainresultsaredrivenbyagencyproblems,thenwhydo?rmsgopublic?

Accepted ArticleThisquestiongoesbacktoJensenandMeckling(1976).Therearemanycostsassociatedwiththedecisiontogopublic.Underwritingdirectexpenses,underpricing,increasedtrans-parency,andshort-termmarketpressuresarejustafewexamples.Thesecostsarebalancedbyvariousbene?tsfromgoingpublic,suchasimprovedaccesstocapital,increasedliquidity,greaterinvestordiversi?cation,andenhanced?rmreputation,amongothers(see,forexam-ple,Pagano,Panetta,andZingales(1998)andRitterandWelch(2002)).Anotherexampleofsuchbene?tsistheincreasedabilityof?rms,followingtheIPO,toacquireexternalinno-vationandattractnewinventors.Thesearetwoimportantmitigatingforcesthatalleviatethedeclineininternalinnovationandthedepartureofexistingemployees.

V.Conclusion

Inthispaper,IinvestigateanimportantyetunderstudiedaspectofIPOs,namely,theef-

fecton?rminnovation.The?ndingsinthispaperrevealacomplextrade-o?betweenpublicandprivateownership.Followingthetransitiontopublicequitymarkets,internalinnovationbecomeslessnovel,incomparisonwith?rmsthatwithdrawtheirIPO?lingandremainepri-vate.Inaddition,?rmsexperienceanexodusofskilledinventors.However,duetoincreased

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accesstocapital,IPO?rmscanrelyonacquisitionoftechnologiesasanadditionalsourceofinnovationandcanattractnewhumancapital.Theseresultssuggestthatgoing …… 此处隐藏：6727字，全部文档内容请下载后查看。喜欢就下载吧 ……