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How do technology ventures signal IPO quality? A configurational approach

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Abstract

This study examines how quality signals sent by technology ventures jointly affect investors' decisions under information asymmetry. We categorize signal contents as concerning technology development, venture officers, or early investors. Because similar information may not much reduce information asymmetry, different signals of the same content substitute for one another in enabling ventures to raise capital in their initial public offerings (IPOs). In contrast, signals of different contents collectively reduce information asymmetry, and thus complement each other. Furthermore, public investors may be more capable of assessing, and therefore give more weight to, signals based on the abilities and commitment of venture officers and early investors than to signals based on the viability and appropriability of technology development. We employ fuzzy set qualitative comparative analysis (fsQCA) and find evidence for these mechanisms from data on 268 IPOs of biotechnology ventures in the United States.

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[Wang, Taiyuan] China Europe Int Business Sch, Dept Strategy & Entrepreneurship, Shanghai, Peoples R China

[Qureshi, Israr] Australian Natl Univ, Coll Business & Econ, Res Sch Management, Canberra, ACT, Australia

[Deeds, David] Univ St Thomas, Opus Coll Business, St Paul, MN USA

[Ren, Yi] Chongqing Technol & Business Univ, Natl Res Base Intelligent Mfg Serv, Res Ctr Econ Upper Reaches Yangtze River, Chongqing, Peoples R China


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Source

Journal of Business Research

ISSN:0148-2963

Year:2019

Volume:99

Page:105-114

ESI Discipline:ECONOMICS & BUSINESS;

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