How do technology ventures signal IPO quality? A configurational approach

Taiyuan Wang, Israr Qureshi, David Deeds and Yi Ren

Journal of Business Research, 2019, vol. 99, issue C, 105-114

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.

Keywords: Quality signals; Technology ventures; Initial public offerings; Signal configurations (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:99:y:2019:i:c:p:105-114

DOI: 10.1016/j.jbusres.2019.01.039

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