Conveying Quality and Value in Emerging Industries : Star Scientists and the Role of Learning in Biotechnology
Managers of private entrepreneurial firms face obstacles in raising capital both in placing a value on a firm and conveying value to investors. These problems are exacerbated when the firm is small, has limited assets (except for human capital) and has yet to have a lead product. In such cases metrics are necessary to convey the value of the firm to investors. Here we explore the importance within the biotechnology industry of the non-financial metrics firms used to convey value during two important initial public offerings (IPO) windows (1989 to 1992 and 1996 to 2000). We also examine whether there was a change over time in the importance of various metrics in determining the value of a biotechnology firm. We find that firms with an affiliated Nobel laureate succeeded in raising the value of their firms by more than $30 million compared to firms without a Nobel laureate during the first period, suggesting that a Nobel laureate served as a powerful signal of firm value. Our results also suggest that the biotechnology regime changed and the Nobel Prize lost its luster as a signal of value in the second period. The importance of several other non-financial metrics changed as well. We conclude that these non-financial metrics of value change in relative importance to potential investors and financial markets as learning occurs and as an industry matures
Year of publication: |
[2015]
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Authors: | Higgins, Matthew John |
Other Persons: | Stephan, Paula E. (contributor) ; Thursby, Jerry G. (contributor) |
Publisher: |
[2015]: [S.l.] : SSRN |
Subject: | Biotechnologie-Industrie | Biotechnology industry | Hochtechnologie | High technology | KMU | SME | Biotechnologie | Biotechnology | Immaterialgüterrechte | Intellectual property rights | Wissenschaftler | Scientists | Nobelpreis | Nobel prize | Börsengang | Initial public offering | Unternehmenswert | Firm value |
Saved in:
freely available
Extent: | 1 Online-Ressource (28 p) |
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Series: | NBER Working Paper ; No. w14602 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 2008 erstellt |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012749932