中英文对照外文翻译文献
(文档含英文原文和中文翻译)
The path-to-profitability of Internet IPO firms
河南会计Abstract
Extant empirical evidence indicates that the proportion of firms going public prior to achieving profitability has been increasing over time. This phenomenon is largely driven by an increa in the proportion of technology firms going public. Since there is considerable uncertainty regarding the long-term economic viability of the firms at the time of going public, identifying factors that influence their ability to attain key post-IPO milestones such as achieving profitability reprents an important area of rearch. We employ a theoretical framework built around agency and signaling considerations to identify factors that influence the probability and timing of post-IPO profitability of Internet IPO firms. We estimate Cox Proportional Hazards models to test whether factors identified by our theo
retical framework significantly impact the probability of post-IPO profitability as a function of time. We find that the probability of post- IPO profitability increas with pre-IPO investor demand and change in ownership at the IPO of the top officers and directors. On the other hand, the probability of post-IPO profitability decreas with the venture capital participation, proportion of outsiders on the board, and pre-market valuation uncertainty.边境牧羊犬
Keywords: Initial public offerings, Internet firms, Path-to-profitability, Hazard models, Survival
安徽特色1. Executive summary
There has been an increasing tendency for firms to go public on the basis of a promi of profitability rather than actual profitability. Further, this phenomenon is largely driven by the increa in the proportion of technology firms going public. The risk of post-IPO failure
is particularly high for unprofitable firms as shifts in investor ntiment leading to negative
market perceptions regarding their prospects or unfavorable financing environments could lead to a shutdown of external financing sources thereby imperiling firm survival. Therefore, the actual accomplishment of post-IPO profitability reprents an important milestone in the company's evolution since it signals the long-term economic viability of the firm. While the extant rearch in entrepreneurship has focud on factors influencing the ability of entrepreneurial firms to attain important milestones prior to or at the time of going public, relatively little is known regarding the timing or ability of firms to achieve critical post-IPO milestones. In this study, we construct a theoretical framework anchored on agency and signaling theories to understand the impact of pre-IPO factors such as governance and ownership structure, management quality, institutional investor demand, and third party certification on firms' post-IPO path-to-profitability. We attempt to validate the testable implications arising from our theoretical framework using the Internet industry as our tting. Achieving post-issue profitability in a timely manner is of particular interest for Internet IPO firms since they are predominantly unprofitable at the time of going public and are typically characterized by high cash burn rates thereby raising
questions regarding their long-term economic viability. Since there is a repeated tendency for high technology firms in various emerging ctors of the economy to go public in waves amid investor optimism followed by disappointing performance, insights gained from a study of factors that influence the path-to-profitability of Internet IPO firms will help increa our understanding of the development path and long-term economic viability of entrepreneurial firms in emerging, high technology industries.
迷茫了怎么办
2. Introduction
The past few decades have witnesd the formation and development of veral vitally important technologically oriented emerging industries such as disk drive, biotechnology, and most recently the Internet industry. Entrepreneurial firms in such knowledge intensive industries are increasingly going public earlier in their life cycle while there is still a great deal of uncertainty and information asymmetry regarding their future prospects (Janey and Folta, 2006). A natural conquence of the rapid transition from founding stage firms to public corporations is an increasing tendency for firms to go public on the basi
s of a promi of profitability rather than actual profitability.3 Although sustained profitability is no longer a requirement for firms in order to go public, actual accomplishment of post-IPO profitability reprents an important milestone in the firm's evolution since it reduces uncertainty regarding the long-term economic viability of the firm. In this paper, we focus on identifying obrvable factors at the time of going public that have the ability to influence the likelihood and timing of attaining post-IPO profitability by Internet firms. We restrict our study to the Internet industry since it reprents a natural tting to study the long-term economic viability of an emerging industry where firms tend to go public when they are predominantly unprofitable and where there is considerably uncertainty and information asymmetry regarding their future prospects.4
鱼国国王
The attainment of post-IPO profitability assumes significance since the IPO event does not provide the same level of legitimizing differentiation that it did in the past as sustained profitability is no longer a prerequisite to go public particularly in periods where the market is favorably inclined towards investments rather than demonstration of profitability (Stuartet al., 1999; Janey and Folta, 2006). During the Internet boom, investors readily accepted the mantra of “growth at all costs” and enthusiastically bid up the post-IPO offering prices to irrational levels (Lange et al., 2001). In fact, investor focus on the promi of growth rather than profitability resulted in Internet start-ups being viewed differently from typical new ventures in that they were able to marshal substantial resources virtually independent of performance benchmarks (Mudambi and Treichel, 2005).
Since the Internet bubble burst in April 2000, venture capital funds dried up and many firms that had successful IPOs went bankrupt or faced vere liquidity problems (Chang, 2004). Conquently, investors' attention shifted from their previously singular focus on
系统配置实用程序
growth prospects to the question of profitability with their new mantra being “path-to- profitability.” As such, market participants focud on not just whether the IPO firm would海参怎么吃法
怎样练一字马
be able to achieve profitability but also “when” or “how soon.” IPO firms unable to credibly demonstrate a clear path-to-profitability were swiftly punished with steeply lower valuations and conquently faced significantly higher financing constraints. Since cash flow negative firms are not yet lf sufficient and, therefore, dependent on external financing to continue to operate, the inability to rai additional capital results in a vicious cycle of events that can quickly lead to delisting and even bankruptcy.5 Therefore, the actual attainment of post-IPO profitability reprents an important milestone in the evolution of an IPO firm providing it with legitimacy and signaling its ability to remain economically viable through the ups and downs associated with changing capital market conditions. The theoretical framework supporting our analysis draws from signaling and agency theories as they relate to IPO firms. In our study, signaling theory provides the theoretical basis to evaluate the signaling impact of factors such as management quality,
third party certification, institutional investor demand, and pre-IPO valuation uncertainty on the path-to-profitability. Similarly, agency theory provides the theoretical foundations to allow us to examine the impact of governance structure and change in top management ownership at the time of going public on the probability of achieving the post-IPO profitability milestone. Our empirical analysis is bad on the hazard analysis methodology to identify the determinants of the probability of becoming profitable as a function of time for a sample of 160 Internet IPOs issued during the period 1996–2000.
