Gestión financiera contable

The pressure to demonstrate compliance with the expected norms and values is critical for entrepreneurial firms due to their liability of newness. As a result, entrepreneurial firms actively seek to associate with other powerful players to help validate that they meet expected norms and behaviors. Theoretically, we have framed our research in terms of reputation for the firm. However, the finding that the biggest “reputation transfer enhancer” is the number of previous IPOs a VC has participated in suggests an element of by-doing and learning-by-experience that has the potential to enhance organizational learning theory. Scholars in the future should also expand the potential for greater theoretical understanding from this work for organizational learning. This also speaks to the concept of path dependency associated with the luck of the earliest investment decisions (Gompers et al., 2010). However, our findings that reputation can change due to poor performance also opens up opportunities to add to work on shifting path dependencies (Ahuja & Katila, 2004; Rasmussen et al., 2011).

A future research topic will be to examine if such increasing, or decreasing, reputation is also found among other entities the focal IPO firm may be associated with as it seeks to build its

38

value. Specifically, scholars should also explore the role of investment banks managing the IPO process. Greater investigation should compare VC firms’ and investment banks’ ability to help build value for the focal IPO firm since such factors may be complementary.

Improving perceptions of external audiences is not only a concern to IPOs. Thus, there is also a need for future research concerning reputation transfers and their enhancers, particularly in a rich set of contexts in which reputation plays a role such as joint ventures (Dacin, et al., 2007), top management teams (Cohen and Dean, 2005), or boards of directors (Marcel and Cowen, 2014). It would also be valuable to expand the examination beyond VC firms to other key parties that can help the firm build its value such as private individual investors (business angels), strategic alliance partners, and accounting firms.

The nature of the relationship between the reputation transfer enhancers also raises an important theoretical question: Can an IPO firm compensate for its lack of financial performance prior to the IPO by engaging with a highly “visible” VC firm with significant prior experience to achieve a high valuation level? In line with Bell et al. (2014), future research should investigate the overall impact of “configurations” of reputation transfer to offset negative aspects of the firm’s valuation by the investor community as the firm goes to IPO. Such configurations might also include the contribution of the quality or expertise of the general partners of the VC firm.

Further, using price premium trend as a proxy for IPO value that is impacted by

reputation transfer is a possible limitation of the study. More importantly,many VC firm-backed entrepreneurial firms exit through strategic sale to a corporate partner. Additional research should explore whether similar findings hold regarding the role of VC firm experience in perceptions of entrepreneurial firms acquired by corporations, as well as the role of investment banks in this process. Additionally, our paper focuses on reputation among VC firms. In contrast,

39

there are calls for developing a more micro-perspective on reputation among VC peers. As most VC investments are syndicated, we already have multiple players that we need to account for in our empirical analyses. Adding a micro-perspective by focusing on individual reputation among peers would add a burdensome level of complexity in a comprehensive empirical paper based on firms. However, consideration of the importance of a micro-perspective on reputation may be another important area for future research.

Finally, we acknowledge that there may be logical inter-dependencies between the main effects of contingency factors that we used in our model. As with any contingency framework, this is a possibility that one cannot discard, and future research will help to establish further that our results are valid in other settings and when employing other analysis mechanisms.

CONCLUSION

Reputation is a core concept in organizational theory and strategic management. While the concept is central to much of the research in management, elaboration of the theory around the concept has surprisingly been limited. Our research fills this gap by theoretically developing the rationale and showing empirical support for the argument that reputation can change over time, therefore making the effectiveness of reputational transfer to the associated entities’ value perceptions time-dependent. Our research also shows there are different mechanisms through which reputation of a third party can be transferred to build value of the focal firm. Our hope is that others not only employ this new expanded understanding of reputation but use it as a foundation for the expansion of knowledge on this important topic.

40 REFERENCES

Acharya, A.G., & Pollock, T.G. 2013. Shoot for the stars? Predicting the recruitment of

prestigious directors at newly public firms. Academy of Management Journal, 56: 1396–

1419.

Ahuja, G., & Katila, R. 2004. Where do resources come from? The role of idiosyncratic situations. Strategic Management Journal, 25: 887-907.

Aiken, L.S., & West, S.G. 1991. Multiple regression: Testing and interpreting interactions.

Newbury Park, CA: Sage.

Atanasov, V., Ivanov, V. & Litvak, K. 2012. Does reputation limit opportunistic behavior in the VC industry? Evidence from litigation against VCs. Journal of Finance, 67: 2215-2246 Baum, J.A.C., & Oliver, C. 1991. Institutional linkages and organizational mortality.

Administrative Science Quarterly, 36: 187-218.

Bitektine, A. 2011. Towards a theory of social judgments of organizations: the case of legitimacy, reputation and status. Academy of Management Review, 36: 151-179.

Beatty, R.P., & Zajac, E.J. 1994. Managerial incentives, monitoring, and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings.

Administrative Science Quarterly, 39: 313-335.

Bell, G., Filatotchev, I., & Aguilera, R. 2014. Corporate governance and investors’ perceptions of foreign IPO value: An institutional perspective. Academy of Management Journal, 57:

301-320.

41

Brander, J., Amit, R., & Antweiler, W. 2002. Venture capital syndication: Improved venture selection vs. the value added hypothesis. Journal of Economics & Management Strategy, 11: 422–451.

Bruton, G., Filatotchev, I., Chahine, S., & Wright, M. 2010. Governance, ownership structure, and performance of IPO firms: The impact of different types of private equity investors and institutional environments. Strategic Management Journal, 31: 491–509.

Certo, S.T. 2003. Influencing initial public offering investors with prestige: Signaling with board structures. Academy of Management Review, 28: 432–446.

Chemmanur, T. J., He, S., & Nandy, D.K. 2010. The going-public decision and the product market. Review of Financial Studies, 23:1855–908.

Chahine, S., Arthurs, J., Filatotchev, I., & Hoskisson, R. 2012. The effects of venture capital syndicate diversity on earnings management and performance of IPOs in the US and UK:

An institutional perspective. Journal of Corporate Finance, 18: 179–192.

Chang, S.J. 2004. Venture capital financing, strategic alliances and the initial public offering of Internet startups. Journal of Business Venturing, 19: 721–741.

Cialdini, R.B., Borden, R.J., Thorne, A., Walker, M.R., Freeman, S., & Sloan, L.R. 1976.

Basking in reflected glory: Three (football) field studies. Journal of Personality and Social Psychology, 34: 366–375.

Cohen, B.D., & Dean, T.J. 2005. Information asymmetry and investor valuation of IPOs: Top management team legitimacy as a capital market signal. Strategic Management Journal, 26(7): 683-690.

Cumming, D. 2007. Government policy towards entrepreneurial finance: Innovation investment funds. Journal of Business Venturing, 22: 193–235.

42

Cumming, D., Fleming, G., & Schwienbacher, A. 2006. Legality and venture capital exits. Journal of Corporate Finance, 12: 214–245.

Dacin, M.T., Oliver, C., & Roy, J-P. 2007. The legitimacy of strategic alliances: An institutional perspective. Strategic Management Journal, 28: 169-187.

Deephouse, D.L. 2000. Media reputation as a strategic resource: An integration of mass communication and resource-based theories. Journal of Management, 26: 1091-1112.

Deephouse, D.L., & Carter, S.M. 2005. An examination of differences between organizational legitimacy and organizational reputation. Journal of Management Studies, 42: 329-360.

Deephouse, D.L., & Suchman, M.C. 2008. Legitimacy in organizational institutionalism. In Sage Handbook of Organizational Institutionalism, Greenwood, R., Oliver, C., Sahlin, K.,

Suddaby, R. (eds.). Sage: Thousand Oaks, CA: 49-77.

Dimov, D.P., & De Clercq, D. 2006. Venture capital investment strategy and portfolio failure rate:

A longitudinal study. Entrepreneurship Theory and Practice, 30: 207–223.

Ebbers, J.J., & Wijnberg, N.M. 2016. Disentangling the effects of reputation and network position on the evolution of alliance networks. Strategic Organization, 8: 255-275.

Epstein, L. G., & Schneider, M. 2008. Ambiguity, information quality, and asset pricing. Journal of Finance, 63: 197-228.

Ertug, G., Yogev, T., Lee, Y.G., & Hedström, P. 2016. The art of representation: How audience-specific reputations affect success in the contemporary art field. Academy of Management Journal, 59: 113-134,

Filatotchev, I., & Bishop, K. 2002. Board composition, share ownership, and ‘underpricing’ of U.K. IPO firms. Strategic Management Journal, 23: 941-955.

43

Filatotchev, I., Chahine, S., & Bruton, G. 2018. Board interlocks and IPO performance in the US and UK: An institutional perspective. Journal of Management, 4: 1620–1650.

Fombrun, C.J. 1996. Reputation: Realizing value from the corporate image. Boston: Harvard Business School Press.

Gompers, P. 1996. Grandstanding in the venture capital industry. Journal of Financial Economics, 42: 133-156.

Gompers, P., Kovner, A., Lerner, J., & Scharfstein, D. 2010. Performance persistence in entrepreneurship. Journal of Financial Economics, 96(1): 18-32.

Gomulya, D., Jin, K., Lee, P. & Pollock, T. 2018. Crossed wires: Endorsement signals and the effects of IPO firm delistings on venture capitalists’ Reputations. Academy of

Management Journal, https://doi.org/10.5465/amj.2016.0796.

Hayward, M. 2002. When do firms learn from their acquisition experience? Evidence from 1990–

1995. Strategic Management Journal, 23: 21–39.

Heckman, J. 1979. Sample selection bias as a specification error. Econometrica, 47: 153–161.

Herbig, P., & Milewicz, J. 1995. The relationship of reputation and credibility to brand success.

Journal of Consumer Marketing, 12: 5–10.

Herbig, P., Milewicz, J., & Golden J. 1994. A model of reputation building and destruction.

Journal of Business Research, 31: 23–31.

Hochberg, Y.V., Ljungqvist, A., & Lu, Y. 2007. Venture capital networks and investment performance. Journal of Finance, 62: 251–301.

Hochberg, Y.V., Lindsey, L.A., & Westerfield, M.M. 2015. Resource accumulation through economic ties: Evidence from venture capital. Journal of Financial Economics, 118: 245–

267.

44

Hunter, L.W. & Thatcher, S.M.B. 2007.Feeling the heat: Effects of stress, commitment, and job experience on job performance. Academy of Management Journal, 50: 953-968.

Ibbotson, R.G., Sindelar, J.L., & Ritter, J.R. 1994. The market’s problems with the pricing of initial public offerings. Journal of Applied Corporate Finance, 7: 66-74.

Kaplan, S.N. & Schoar, A. 2005. Private equity performance: Returns, persistence, and capital flows. The Journal of Finance, 60: 1791-1823.

Krishnan, C.N.V., Ivanov, V.I., Masulis, R.W., & Singh, A.K. 2011.Venture capital reputation, post-IPO performance, and corporate governance. Journal of Financial and Quantitative Analysis, 46: 1295-1333.

Kim, M, & Ritter, J. 1999. Valuing IPOs. Journal of Financial Economics, 53:409-437.

King, B.G., & Whetten, D.A. 2008. Rethinking the relationship between reputation and

legitimacy: A social actor conceptualization. Corporate Reputation Review, 11: 192–207.

Kraatz, M.S., & Love, E.G. 2006. Studying the dynamics of reputation: A framework for

research on the reputational consequences of corporate actions. Research Methodology in Strategy and Management, 3: 343-383.

Lange D., Lee, P.M., & Dai Y. 2011. Organizational reputation: A review. Journal of Management, 37: 153-184.

Lee, P.M., Pollock, T.G., & Jin, K. 2011. The contingent value of venture capitalist reputation for entrepreneurial firms. Strategic Organization, 9: 33-69.

Lee, P.M., & Wahal, S. 2004. Grandstanding, certification and the underpricing of venture capital backed IPOs. Journal of Financial Economics, 73: 375-407.

45

Love, E.G., & Kraatz, M.S. 2009. Character, conformity, or the bottom line? How and why downsizing affected corporate reputation. Academy of Management Journal, 52: 314-335.

Loughran, T., & Ritter, J.R. 2004. Why has IPO underpricing increased over time? Financial Management, 33: 5-37.

Lowry, M., Officer, M.S. & Schwert, G.W. 2010. The variability of IPO initial returns. The Journal of Finance, 65: 425-465.

Lungeanu, R. & Zajac, E. 2016. Venture capital ownership as a contingent resource: How owner-firm fit influences IPO outcomes. Academy of Management Journal, 59: 930–955.

Marcel, J.J., & Cowen, A.P. 2014. Cleaning house or jumping ship? Understanding board upheaval following financial fraud. Strategic Management Journal, 35: 926-937.

McBride, S. & Groom, N. 2013. Insight: How cleantech tarnished Kleiner and VC star John Doerr.

Reuters. https://www.reuters.com/article/us-kleiner-doerr-venture/insight-how-cleantech-tarnished-kleiner-and-vc-star-john-doerr-idUSBRE90F0AD20130116 [accessed October 18, 2018].

Nelson, T. 2003. The persistence of founder influence: Management, ownership, and

performance effects at initial public offering. Strategic Management Journal, 24: 707-724.

Pagano, M., & Roell, A. 1998, The choice of stock ownership structure: Agency costs,

monitoring and the decision to go public, Quarterly Journal of Economics, 113:187–225.

Park, H.D. & Patel, P.C. (2015), How does ambiguity influence IPO Underpricing? The role of the signaling environment, Journal of Management Studies, 52: 796-818.

46

Petkova, A.P., Wadhwa, A., Xin, Y., & Jain, S. 2014. Reputation and decision making under ambiguity: A study of U.S. venture capital firms’ investments in the emerging clean energy sector. Academy of Management Journal, 57: 422-448.

Podolny, J. 1993. A status-based model of market competition. American Journal of Sociology, 98: 829-872.

Pollock, T.G., Rindova, V.P., & Maggitti, P.G. 2008. Market watch: Information and availability cascades among media and investors in the U.S. IPO market. Academy of Management Journal, 51: 335-358.

Pollock, T.G., Lee P.M., Jin K., & Lashley K. 2015. (Un) tangled: Exploring the asymmetric coevolution of new venture capital firms’ reputation and status. Administrative Science Quarterly, 60:482-517.

Pollock, T.G., Chen, G., Jackson, E.M., & Hambrick D.C. 2010. How much prestige is enough?

Assessing the value of multiple types of high-status affiliates for young firms. Journal of Business Venturing, 25: 6-23.

Proimos, A., & Wright, S. 2005. A pilot study of venture capital investment appraisal in Australia.

Journal of Financial Services Marketing, 9: 272–286.

Rasheed, A., Datta, D., & Chinta, R. 1997. Determinants of price premiums: A study of initial public offerings in the medical diagnostics and devices industry. Journal of Small Business Management, 35: 11–23.

Rasmussen, E., Mosey, S. & Wright, M. 2011. The evolution of entrepreneurial competencies: A longitudinal study of university spin-off venture emergence, Journal of Management Studies, 48(6): 1314-1345

47

Rindova V.P., Williamson, I.O., Petkova A.P., & Sever J.M. 2005. Being good or being known:

An empirical examination of the dimensions, antecedents, and consequences of organizational reputation. Academy of Management Journal, 48: 1033-1050.

Ritter, J., & Welch, I. 2002. A Review of IPO activity, pricing, and allocations, Journal of Finance, 57: 1795-1828.

Sanders, W. G. & Boivie, S. 2004. Sorting things out: valuation of new firms in uncertain markets. Strategic Management Journal, 25: 167–86.

Selden, R. 1978. The chain store paradox. Theory and Decision, 9:127-159.

Sorensen, O., & Stuart, T.E. 2001. Syndication networks and the spatial distribution of venture capital investments. American Journal of Sociology, 106: 1546-1588.

Tian, X. 2012. The role of venture capital syndication in value creation for entrepreneurial firms.

Review of Finance,16: 245–283.

Tykvova, T., & Walz, U. 2007. How important is participation of different venture capitalists in German IPOs?, Global Finance Journal, 17: 350–378.

Welbourne, T., & Andrews, A. 1996. Predicting performance of initial public offerings: Should human resource management be in the equation? Academy of Management Journal, 39:

891–919.

Wright, M., & Lockett, A. 2003. Structure and management of alliances: Syndication of venture capital investments, Journal of Management Studies, 40: 2073-2104.

Yang, Y., Narayanan, V.K., & Zahra, S. 2009. Developing the selection and valuation capabilities through learning: The case of corporate venture capital. Journal of Business Venturing, 24:261-273.

48

Yang, Z., Su, C. & Fam, K-S. 2012. Dealing with institutional distances in international marketing channels: Governance strategies that engender legitimacy and efficiency. Journal of

Marketing, 76: 41-55

Zajac, E.J., & Westphal, J.D. 1994. The costs and benefits of managerial incentives and monitoring in large U.S. corporations: When is more not better? Strategic Management Journal, 15:

121–142.

Zhelyazkov, P.I., & Gulati, R. 2016. After the break-up: The relational and reputational

consequences of withdrawals from venture capital syndicates. Academy of Management Journal, 59: 277-301.

49 ENDNOTES

1 Press comment also points to this bi-directional change in reputations over time: “…The market changes have left Kleiner…..with dozens of investments that may never pay off, threatening its image as the gold standard of venture capital….Some Silicon Valley

entrepreneurs say Kleiner, while well-regarded, is no longer at the very top of the VC heap. Such impressions matter when VC firms compete to fund the most promising startups, and getting in on the best deals is in turn key to future success” (McBride & Groom, 2013). Further, Atanasov, Ivanov and Litvak (2012) also find support for the argument that VCs may experience a

reduction in reputation in their investigation of the impact of litigation on VCs.

2 We thank an anonymous reviewer for this helpful suggestion.

3 Welbourne and Andrews (1996) use the following example to justify the construction of the IPO premium. Consider two companies selling their stock at $10.00 per share. Firm X has a book value of $2.00, and firm Y has a book value of $6.00. Firm X is a riskier investment, because if it goes bankrupt, its assets are only worth $2.00, but those of firm Y are worth $6.00.

For firm X and firm Y to command equivalent stock prices, an investor must believe that firm X has the potential to do very well. The difference between the stock price and the book value per share is called the dilution value, since it represents a dilution to investors purchasing the stock.

However, from the company's perspective, it is a price premium. The company attempts to maximize this premium in its offering, and investors wish to minimize the premium so that their investments are more secure. Further, Welbourne and Andrews (1996) and other researchers clearly recognize limitations of using the book value in the denominator for IPO firms. This is especially the case in young IPOs with limited history and low book value, which may

artificially inflate their IPO price premium. Using the offer price as a denominator allows us to

50

avoid such limitations and provides a more reliable proxy of the percentage of the price paid in excess of the book value per share.

4 In line with Loughran and Ritter (2004), hi-tech firms as those with the following SIC codes:

3571, 3572, 3575, 3577, 3578 (computer hardware), 3661, 3663, 3669 (communications equipment), 3671, 3672, 3674, 3675, 3677, 3678, 3679 (electronics), 3812 (navigation equipment), 3823, 3825, 3826, 3827, 3829 (measuring and controlling devices), 3841, 3845 (medical instruments), 4812, 4813 (telephone equipment), 4899 (communications services), 7371, 7372, 7373, 7374, 7375, 7378, and 7379 (software).

5 We thank the reviewers for this helpful suggestion.

6 In further robustness tests, we repeat our tests using fixed effects panel regressions and controlling for the inverse mills. The Hausman test shows a significant p-value at the 1% level, which suggests that fixed effects can be used to control for potential endogeneity. Our empirical tests show consistent results and validate our predictions on the association between IPO

valuation and VC reputation trend. The results are available upon request.

7 Our IPO premium measures the excess price paid over and above the book value, and we do not take into account a price discovery process which leads to a negotiated price depending on the characteristics of the issuing firms, investment banks, and IPO investors (Loughran and Ritter, 2004). We therefore run an additional robustness test using Tobin’s Q, calculated at the closing price of the first day of trading, as a dependent variable. Similar to the price premium trend, we calculated a new ordinal variable for Tobin’s Q, Past VC Tobin’s Q Trend, ranging from 1 to 5 since 1990 for each VC firm. Our results confirm the positive and significant relationship between the Tobin’s Q variable and the Past VC Tobin’s Q Trend as well as the positive moderating effect of our three reputation transfer enhancers. Our results are robust with the

51

entire sample using VC Age or the sub-sample using LPJ VC reputation index. Considering Tobin’s Q, we may avoid looking deeply into the price negotiation between issuers and

underwriters and directly focus on public market investor valuations. Our findings confirm that our dynamic VC reputation measure still positively affects IPO pricing dynamics, and the results are available upon request.

8 Although not tabulated, in further investigations we repeated all our empirical tests using LPJ VC reputation index as a control variable for VC reputation. The results remain consistent, yet slightly less significant, and confirm our hypotheses. We further examined the role of

underwriter reputation in affecting the association between IPO valuation and our measure for VC reputation. Specifically, using IPO premium as a dependent variable, we controlled for the interaction of underwriter reputation with Past VC premium trend. Our tests indicate the lack of a significant effect of Underwriter Reputation x Past VC premium trend on IPO premium. This suggests that underwriter reputation positively affect IPO premium. However, it does not affect the association between Past IPO Premium trend and IPO premium.

52

53

14 15 16 17 18 19 20 21 22 23 24 25

12. Corporate VC 1.00

13. VC Syndicate .07*** 1.00

14. Total Assets -.02 -.10*** 1.00

15. IPO Age -.06*** -.10*** 0.15*** 1.00

16. Hi-tech dummy .07*** .01 -.07*** -.08*** 1.00

17. Loss dummy .07*** .09*** -.03** -.13*** .07*** 1.00

18. Debt to Equity -.02 -.05*** .03** .08*** .02 -.06 1.00

19. Participation ratio -.07*** -.05*** .12*** .18*** .14*** -.20*** .03** 1.00

20. Underwriter Reputation .05*** .11*** .06*** -.02 .08*** .03** .01 -.01 1.00

21. NASDAQ -.01 -.02 -.07*** -.03** -.02 .06*** -.15*** -.05*** .01 1.00

22. Market Return .02 -.03** -.04*** -.05*** .06*** -.02 -.02 -.06*** .03** .04*** 1.00

23. Heat degree .05*** .00 -.04*** -.08*** .11*** .02 -.02 -.09*** .11*** .08*** .36*** 1.00

Table 1 includes the descriptive statistics in mean and standard deviation for the total number of 7,331 individual VC observations for 1,174 VCs involved in 1,676 VC-backed IPOs from 1990 to 2011, and the Correlation Matrix for the main variables. Pearson’s correlation coefficients were used for continuous variables, point biserial correlation coefficients were used for dichotomous variables. * p < .05, ** p < .01, *** p < .001.

In document EMPRESA PÚBLICA ESPE INNOVATIVA (página 48-67)