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Financing Innovation in the United States, 1870 to the Present$
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Naomi R Lamoreaux and Kenneth L Sokoloff

Print publication date: 2007

Print ISBN-13: 9780262122894

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262122894.001.0001

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PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 26 September 2021

Real Effects of Knowledge Capital on Going Public and Market Valuation

Real Effects of Knowledge Capital on Going Public and Market Valuation

Chapter:
(p.433) 11 Real Effects of Knowledge Capital on Going Public and Market Valuation
Source:
Financing Innovation in the United States, 1870 to the Present
Author(s):

Michael R. Darby

Lynne G. Zucker

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262122894.003.0012

This chapter discusses and argues that the financial prospects of a firm are changed by the positive effects of access to knowledge capital on firm performance. This is seen to be especially true of early funding by venture capitalists, and of funding through an initial public offering (IPO). The approach used in this argument adds indicators for knowledge capital as it is generally viewed, as intangible capital in financial analyses of firms. The chapter adds, however, the quantified effect of knowledge capital on the bottom line of firms’ market performance. The chapter reviews a multitude of private biotech firms and estimates survival models in order to give an explanation of each year’s probability that a particular firm will go public. What is found is that factors such as an increase in knowledge capital, venture capital funding and a hot market all contribute in raising the probability that a firm will go public.

Keywords:   knowledge capital, initial public offering, IPO, venture capital funding, survival models, private biotech firms, intangible capital

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