Publication Type
Working Paper
Version
publishedVersion
Publication Date
1-2015
Abstract
We study the predictive power of patents on the long-run performance of venture capital (VC)-backed initial public offerings (IPOs). We show that VC-backed IPOs that have at least one patent at the time of the IPO substantially outperform other VC-backed IPOs, with 3-year buy-and-hold market-adjusted returns of -7.1% vs. -23.3%. On average, VC-backed IPOs without patents perform similarly to non-VC-backed IPOs. We also report that VC-backed IPOs from 1981-1998 outperformed other IPOs, but the pattern has reversed for IPOs from 1999-2006. Although a smaller proportion of non-VC-backed IPOs possess patents, those with patents also outperform those without patents.
Keywords
Initial public offerings, Venture capital, Patents, Innovation, Long-run performance
Discipline
Finance and Financial Management
Identifier
10.2139/ssrn.2364668
Publisher
SSRN
Citation
CAO, Jerry X.; JIANG, Fuwei; and RITTER, Jay R.
Patents, innovation, and performance of venture capital-backed IPOs. (2015).
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5230
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.2364668
