上市公司盈利能力分析外文文献

The path-to-profitability of Internet IPO firms ☆

Bharat A.Jain a,1,Narayanan Jayaraman b,2,Omesh Kini c,?

a

College of Business and Economics,Towson University,Towson,MD 21044,United States b College of Management,Georgia Institute of Technology,Atlanta,GA 30332,United States

c Robinson College of Business,Georgia State University,Atlanta,GA 30303,Unite

d States

Received 1October 2006;received in revised form 1December 2006;accepted 1February 2007

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 increase in the

proportion of technology firms going public.Since there is considerable uncertainty regarding the long-term

economic viability of these firms at the time of going public,identifying factors that influence their ability

to attain key post-IPO milestones such as achieving profitability represents an important area of research.

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 theoretical framework significantly

impact the probability of post-IPO profitability as a function of time.We find that the probability of post-

IPO profitability increases 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 decreases with the venture

capital participation,proportion of outsiders on the board,and pre-market valuation uncertainty.

?2007Published by Elsevier Inc.

Keywords:Initial public offerings;Internet firms;Path-to-profitability;Hazard models;

Survival

Journal of Business Venturing xx (2007)xxx –xxx

MODEL 1A

JBV-05413;No of Pages 30☆

We would like to thank Kalpana Narayanan,Raghavendra Rau,Sankaran Venkataraman (Editor),Phil Phan

(Associate Editor),two anonymous referees,and participants at the 2002Financial Management Association

Meetings in San Antonio for helpful comments.We thank Paul Gilson and Sandy Lai for excellent research

assistance.The usual disclaimer applies.?Corresponding author.Tel.:+14046512656;fax:+14046522630.

E-mail addresses:bjain@https://www.wendangku.net/doc/0d3267541.html, (B.A.Jain),narayanan.jayaraman@https://www.wendangku.net/doc/0d3267541.html, (N.Jayaraman),

okini@https://www.wendangku.net/doc/0d3267541.html, (O.Kini).

1Tel.:+14107043542;fax:+14107043454.

2Tel.:+14048944389;fax:+14048946030.

0883-9026/$-see front matter ?2007Published by Elsevier Inc.

doi:10.1016/j.jbusvent.2007.02.004

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1.Executive summary

There has been an increasing tendency for firms to go public on the basis of a promise of profitability rather than actual profitability.Further,this phenomenon is largely driven by the increase in the proportion of technology firms going public.The risk of post-IPO failure is particularly high for unprofitable firms as shifts in investor sentiment 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 represents an important milestone in the company's evolution since it signals the long-term economic viability of the firm.While the extant research in entrepreneurship has focused 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 setting.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 sectors 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 increase our understanding of the development path and long-term economic viability of entrepreneurial firms in emerging, high technology industries.

Using a sample of160Internet IPO firms that went public during the period1996–2000, we estimate Cox Proportional Hazards(CPH)models to analyze the economic significance of factors that influence the post-IPO path-to-profitability.Consistent with agency explanations,we find that a higher proportion of inside directors on the board and the change in pre-to-post-IPO ownership of top management are both significantly positively related to the probability of attaining post-IPO profitability.These results support arguments in the governance literature pointing to the beneficial impact of the presence of more insiders on the boards of high technology companies as well as the signaling value of the ownership stake of top management in the post-IPO firm.Additionally,we find evidence to indicate that higher institutional investor demand serves as an effective signal of the ability of Internet firms to attain post-IPO profitability,while greater pre-IPO valuation uncertainty reflects higher divergence of opinion about the future prospects of the IPO firm, and serves as a negative signal of the ability to achieve post-IPO profitability.Finally,we find that while underwriter prestige is unrelated to the probability of post-IPO profitability, VC participation decreases the probability of post-IPO profitability.Our results regarding the impact of VC participation on the probability of post-IPO profitability support arguments in the literature that VCs during the Internet boom period had incentives to grandstand by Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

taking their companies public prematurely and that their monitoring role in the post-IPO

period was rather limited since they cashed out earlier due to shorter lock-up periods.

Our study makes several contributions.First,we construct a theoretical framework based

on agency and signaling theories to identify factors that may influence the path-to-

profitability of IPO firms.Second,we provide empirical evidence on the economic viability

(path-to-profitability and firm survival)of newly public Internet firms.Third,our study

adds to the theoretical and empirical literature that has focused on factors influencing the

ability of entrepreneurial firms to achieve critical milestones during the transition from

private to public ownership.While previous studies have focused on milestones during the

private phase of firm development such as receipt of VC funding and completion of a public

offering,our study extends this literature by focusing on a post-issue milestone such as

attaining profitability.

2.Introduction

The past few decades have witnessed the formation and development of several 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 consequence of the rapid transition from founding stage firms to

public corporations is an increasing tendency for firms to go public on the basis of a

promise of profitability rather than actual profitability.3Although sustained profitability is

no longer a requirement for firms in order to go public,actual accomplishment of post-IPO

profitability represents 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 observable 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 represents a natural setting 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

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 (Stuart

et 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 promise of growth

rather than profitability resulted in Internet start-ups being viewed differently from typical

3

For example,Ritter and Welch (2002)report that the percentage of unprofitable firms going public rose form

19%in the 1980s to 37%during 1995–1998.

4Schultz and Zaman (2001)report that only 8.72%of the Internet firms that went public during January 1999

to March 2000were profitable in the quarter prior to the IPO.

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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 April2000,venture capital funds dried up and many firms that had successful IPOs went bankrupt or faced severe liquidity problems(Chang, 2004).Consequently,investors'attention shifted from their previously singular focus on growth prospects to the question of profitability with their new mantra being“path-to-profitability.”As such,market participants focused on not just whether the IPO firm would 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 consequently faced significantly higher financing constraints.Since cash flow negative firms are not yet self sufficient and,therefore,dependent on external financing to continue to operate,the inability to raise additional capital results in a vicious cycle of events that can quickly lead to delisting and even bankruptcy.5Therefore,the actual attainment of post-IPO profitability represents 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 based on the hazard analysis methodology to identify the determinants of the probability of becoming profitable as a function of time for a sample of160Internet IPOs issued during the period1996–2000.

Our study makes several contributions.First,we construct a theoretical framework based on agency and signaling theories to identify factors that may influence the path-to-profitability of IPO firms.Second,we provide empirical evidence on the economic viability of newly public firms(path-to-profitability and firm survival)in the Internet industry.Third, we add to the theoretical and empirical entrepreneurship literature that has focused on factors influencing the ability of entrepreneurial firms to achieve critical milestones during the transition from private to public ownership.While previous studies have focused on milestones during the private phase of firm development such as receipt of VC funding and successful completion of a public offering(Chang,2004;Dimov and Shepherd,2005; Beckman et al.,2007),our study extends this literature by focusing on post-IPO milestones. Finally,extant empirical evidence indicates that the phenomenon of young,early stage 5The case of E-Toys an Internet based toy retailer best illustrates this cyclical process.E-Toys was successful in developing an extensive customer base and a strong brand.However,the huge investment in technology, advertising,and promotion to sustain their activities as well as increased competition from both new entrants and old economy firms adopting the Internet to sell toys resulted in depressed profit margins and a longer than expected post-IPO time-to-profitability.Investors discouraged by the firm not reaching profitability within the expected time frame reacted negatively,leading to a steep drop in stock prices and consequently drying up of additional sources of external financing.As a result,the firm was forced to file for bankruptcy within a short period of time after its highly successful IPO.

Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

firms belonging to relatively new industries being taken public amid a wave of investor

optimism fueled by the promise of growth rather than profitability tends to repeat itself over

time.6However,profitability tends to remain elusive and takes much longer than anticipated

which results in investor disillusionment and consequently high failure rate among firms in

such sectors.7Therefore,our study is likely to provide useful lessons to investors when

applying valuations to IPO firms when this phenomenon starts to repeat itself.

This articles proceeds as follows.First,using agency and signaling theories,we develop

our hypotheses.Second,we describe our sample selection procedures and present

descriptive statistics.Third,we describe our research methods and present our results.

Finally,we discuss our results and end the article with our concluding remarks.

3.Theory and hypotheses

Signaling models and agency theory have been extensively applied in the financial

economics,management,and strategy literatures to analyze a wide range of economic

phenomena that revolve around problems associated with information asymmetry,moral

hazard,and adverse selection.Signaling theory in particular has been widely applied in the

IPO market as a framework to analyze mechanisms that are potentially effective in

resolving the adverse selection problem that arises as a result of information asymmetry

between various market participants (Baron,1982;Rock,1986;Welch,1989).In this study,

signaling theory provides the framework to evaluate the impact of pre-IPO factors such as

management quality,third party certification,and institutional investor demand on the path-

to-profitability of Internet IPO firms.

The IPO market provides a particularly fertile setting to explore the consequences of

separation of ownership and control and potential remedies for the resulting agency

problems since the interests of pre-IPO and post-IPO shareholders can diverge.In the

context of the IPO market,agency and signaling effects are also related to the extent that

insider actions such as increasing the percentage of the firm sold at the IPO,percentage of

management stock holdings liquidated at the IPO,or percentage of VC holdings liquidated

at the IPO can accentuate agency problems with outside investors and,as a consequence,

signal poor performance (Mudambi and Treichel,2005).We,therefore,apply agency

theory to evaluate the impact of board structure and the change in pre-to-post IPO

ownership of top management on the path-to-profitability of Internet IPO firms.

https://www.wendangku.net/doc/0d3267541.html,ernance structure

In the context of IPO firms,there are at least two different agency problems (Mudambi

and Treichel,2005).The first problem arises as a result of opportunistic behavior of agents to

6

Interestingly,just a few years after the https://www.wendangku.net/doc/0d3267541.html, bust,technology companies have again started going public

while they are still unprofitable (Lashinsky,2006).

7For instance,in the biotechnology industry where the first company went public a quarter century ago,public

companies have taken in close to $100billion dollars from stock market investors but have delivered cumulative

losses of more than $40billion (Hamilton,2004).Similarly,the disk drive industry in the early 1980s passed

through phases similar to the Internet industry in terms of high firm founding rates,explosive growth,

overoptimistic investors,IPO clusters,and high post-IPO failure rate (Lerner,1995).

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increase their share of the wealth at the expense of principals.The introduction of effective monitoring and control systems can help mitigate or eliminate this type of behavior and its negative impact on post-issue performance.The extant corporate governance literature has argued that the effectiveness of monitoring and control functions depends to a large extent on the composition of the board of directors.We,therefore,examine the relationship between board composition and the likelihood and timing of post-IPO profitability.

The second type of agency problem that arises in the IPO market is due to uncertainty regarding whether insiders seek to use the IPO as an exit mechanism to cash out or whether they use the IPO to raise capital to invest in positive NPV projects.The extent of insider selling their shares at the time of the IPO can provide an effective signal regarding which of the above two motivations is the likely reason for the IPO.We,therefore,examine the impact of the change in ownership of officers and directors around the IPO on the likelihood and timing of attaining post-issue profitability.

3.1.1.Board composition

The corporate governance literature has generally argued that a greater proportion of outside directors on the board increases board independence and results in better monitoring of management and thereby lowers agency costs(Fama,1980;Fama and Jensen,1983; Williamson,1984).Therefore,a greater proportion of outside directors on the board of Internet IPO firms is likely to lead to a more effective monitoring and control environment, thus ensuring that managers pursue shareholder value maximizing strategies.In addition, due to their short operating history,management of Internet IPO firms are unlikely to have developed the necessary links with customers,suppliers,bankers,and other important stakeholders of the firm.Outside directors can be instrumental in facilitating the establishment of such links,thereby allowing these firms to better compete in the product market as well as capital market.On the basis of the above discussion,we would expect Internet IPO firms with more independent boards to be on a faster path-to-profitability. Hypothesis1:The proportion of outsiders on the board of Internet IPO firms is positively related to the probability of profitability and negatively related to time-to-profitability during the post-IPO period.

The extant empirical evidence on the positive relation between board composition and performance,however,has been mixed,both for IPO firms as well as more seasoned corporations(Dalton et al.,1998;Baker and Gompers,2003).The ambiguous results can be partly attributed to the tradeoff between the benefits from the presence of outside directors such as more effective monitoring and control,greater objectivity,and assistance in resource acquisitions versus the benefits provided by inside directors such as detailed knowledge of the firm's operations,customer requirements,and technology that in turn can help the strategic planning process.Viewed through the innovation and technology prism, high technology Internet IPO firms may actually benefit more from in-depth technological knowledge,expertise,commitment,and innovative thinking that insiders bring to the board,rather than from the monitoring and control benefits provided by outside directors.In support of this argument,Zahra(1996)points out that boards comprised of a higher proportion of insiders may be more innovative and better positioned to serve management Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

as knowledgeable sounding boards in the formulation of strategy.Further,since high

technology Internet firms are unlikely to generate substantial free cash flows in the period

immediately after the IPO,the potential for wasteful expenditure is lower,and therefore,the

benefits of monitoring and control provided by outsiders is less likely to be substantive.If

there is a greater need for creative thinking and decision-making in high technology

knowledge-based industries that only insiders are uniquely qualified to provide,we expect a

negative relation between the proportion of outsiders on the board and the probability of

profitability and a positive relation with time-to-profitability.

Hypothesis 1A:The proportion of outsiders on the board of Internet firms is negatively

related to the probability of profitability and positively related to time-to-profitability

during the post-IPO period.

3.1.2.Ownership of officers and directors

Corporate governance studies have also focused extensively on corporate ownership and

its impact on performance,both in isolation and in conjunction with board composition.

Both agency and signaling theories provide similar predictions regarding the relationship

between the extent of insider ownership and post-issue performance.Agency theory

suggests that high insider ownership reduces agency conflicts and enhances organizational

performance,while signaling theory argues that higher insider ownership is a credible

signal of insider's confidence regarding the future prospects of the firm.The change in the

ownership of the top managers and directors around the offering can be viewed as an

important signal of the issuing firm's future prospects (Leland and Pyle,1977).

In the context of the IPO market,a large post-IPO decline in top management ownership

can be interpreted as a signal of their lack of confidence in the ability of the firm to generate

sufficient cash flows to reach the profitability milestone.Additionally,any decline in the

ownership stakes of owners/managers is likely to adversely affect post-IPO performance

due to higher agency costs (Jensen and Meckling,1976).While the extent of the change in

ownership of insiders around the IPO is an informative signal for all types of IPO firms,it is

particularly relevant in the context of Internet firms that go public while predominantly

unprofitable and where the informational and incentive problems are particularly acute.For

instance,Mudambi and Treichel (2005)find that a substantial reduction in equity holdings

of the top management of Internet firms signals an impending cash crisis.We,therefore,

argue that the greater the decline in the pre-to-post IPO ownership of top managers and

directors,the lower the probability of attaining profitability,and consequently the longer the

time-to-profitability.

Hypothesis 2:The decline in ownership of officers and directors from pre-to-post-IPO is

negatively related to the probability of attaining profitability and positively related to time-

to-profitability after the IPO.

3.2.Management quality

An extensive body of research has examined the impact of top management team (TMT)

characteristics on firm outcomes for established firms as well as for new ventures by

drawing from human capital and demography theories (Eisenhardt and Schoonhoven,

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1990;Finkelstein and Hambrick,1990;Wiersema and Bantel,1992;Hambrick et al.,1996; Beckman et al.,2007).For instance,researchers drawing from human capital theories study the impact of characteristics such as type and amount of experience of TMTs on performance(Cooper et al.,1994;Gimeno et al.,1997;Burton et al.,2002;Baum and Silverman,2004).Additionally,Beckman et al.(2007)argue that demographic arguments are distinct from human capital arguments in that they examine team composition and diversity in addition to experience.The authors consequently examine the impact of characteristics such as background affiliation,composition,and turnover of TMT members on the likelihood of firms completing an IPO.Overall,researchers have generally found evidence to support arguments that human capital and demographic characteristics of TMT members influence firm outcomes.

Drawing from signaling theory,we argue that the quality of the TMTof IPO firms can serve as a signal of the ability of a firm to attain post-IPO profitability.Since management quality is costly to acquire,signaling theory implies that by hiring higher quality management,high value firms can signal their superior prospects and separate themselves from low value firms with less capable managers.The beneficial impact of management quality in the IPO market includes the ability to attract more prestigious investment bankers,generate stronger institutional investor demand,raise capital more effectively,lower underwriting expenses, attract stronger analyst following,make better investment and financing decisions,and consequently influence the short and long-run post-IPO operating and stock performance (Chemmanur and Paeglis,2005).Thus,agency theory,in turn,would argue that higher quality management is more likely to earn their marginal productivity of labor and thus have a lower incentive to shirk,thereby also leading to more favorable post-IPO outcomes.8 We focus our analyses on the signaling impact of CEO and CFO quality on post-IPO performance.We focus on these two members of the TMT of IPO firms since they are particularly influential in establishing beneficial networks,providing legitimacy to the organization,and are instrumental in designing,communicating,and implementing the various strategic choices and standard operating procedures that are likely to influence post-IPO performance.

3.2.1.CEO characteristics

CEOs play a major role in designing and implementing strategic choices and policies for their firms.Their actions can have long-term significance since they typically define long-term policies of the firm(Parrino,1997).While the role and influence of CEOs on strategic choices,incentive mechanisms,accountability issues,and consequently performance is vital for all types of organizations,their impact is especially relevant for newly public firms that face significant competitive,product market,and financing challenges during the post-IPO phase.The role and impact of CEOs can be even more critical for the subset of technology related IPO firms since they may require fundamentally different skill sets and competencies from CEOs compared to those required to run companies in more traditional industries.

We assess CEO quality by focusing on variables that capture the extent of general and specific human capital developed by them through their prior work experience and their risk propensity and decision-making behavior.In distinguishing between general and specific

8We thank the Associate Editor,Phil Phan for suggesting this explanation.

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human capital,we use an approach similar in spirit to Gimeno et al.(1997).Specifically,in

the context of our study,general human capital is associated with skills and reputation built

through experience in reputable organizations across industries,while specific human

capital is developed though experience specifically within the technology sector.

Researchers in entrepreneurship have argued that career history is an important vehicle

through which TMT members accrue bonding and bridging social capital that is likely to

enhance venture performance (Burton et al.,2002).TMT members bring to the table a set of

experience and contacts from prior jobs that can benefit their new employers (Burton et al.,

2002;Chandler and Hanks,1998).Recently,in addition to functional and tenure diversity,

the entrepreneurship research has focused on background affiliation as another important

TMT demographic characteristic that can influence firm outcomes particularly in young,

high technology industries.For instance,Beckman et al.(2007)decompose background

affiliation into affiliation diversity and affiliation overlap and provide evidence to indicate

that they are significantly related to the ability of high technology entrepreneurial firms to

attain important milestones such as receiving venture capital financing and successfully

completing an IPO.

Focusing on past affiliation characteristics,we argue that the perceived value of the

general human capital developed by CEOs is likely to depend on the nature of the

organizations within which they gained experience prior to assuming their current roles.

Research indicates that prior experience gained by working in a prominent company can be

beneficial (Burton et al.,2002).Individuals who gain their corporate experience in major

reputable corporations where they were provided with the opportunity to rotate through

several functional areas as well as gain external experience through dealings with bankers,

financial analysts,professional organizations,institutional investors,industry associations,

and board memberships are likely to have built up significant social and reputation capital

as well as credibility with various market participants.Therefore,prior affiliation of the

CEO with a reputable organization has the potential to serve as a signal of management

quality and legitimacy and,therefore,should be positively related to the probability of

attaining profitability and negatively related to the time-to-profitability.

Hypothesis 3:CEO prior experience in reputable organizations is positively related to

likelihood of attaining post-IPO profitability and negatively related to time-to-profitability.

Another dimension of CEO quality that we explore is the extent of specific human capital

developed as a result of relevant experience in the technology sector.Due to the specific

characteristics of technology businesses such as the need for risk taking behavior,faster time

to market,shorter product life cycles,and a strong focus on R&D investments,relevant

experience in the high velocity technology sector is likely to help improve the quality of

CEO decision-making.In addition,relevant industry experience by the CEO should improve

their credibility with capital market participants such as investment bankers,venture

capitalists,and institutional investors.As such,the CEO's relevant industry experience in

the technology sector can serve as a credible signal of management quality and should lead to

a higher probability of profitability and a shorter time-to-profitability.

Hypothesis 3A:CEO prior experience in the technology sector is positively related to the

probability of profitability and negatively related to the time-to-profitability.

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In addition to human capital,we argue that the quality of top management entre-preneurial teams is determined by the decision-making behavior,appetite for growth,and risk taking propensity of the CEO.Extant research has suggested that older top managers compared to their younger counterparts tend to follow lower growth strategies,are more risk averse,and less likely to invest in R&D(Child,1974;Hambrick and Mason,1984; Barker and Mueller,2002).Furthermore,drawing from learning theory,Hambrick and Mason(1984)argue that older executives may have greater difficulty in grasping new ideas and learning new behaviors.In addition,Mudambi and Treichel(2005)argue that the experience,knowledge,and insights associated with age are considered less valuable and even a liability for firms operating in the“new economy.”They argue that in the context of Internet firms,younger founders and top managers were thought to have better insights and understanding of critical aspects of the new economy such as technology,markets,and metrics.On the basis of the above discussion,we hypothesize that CEO age is negatively related to the probability of attaining post-IPO profitability.

Hypothesis3B:CEO age is negatively related to the probability of post-IPO profitability and positively related to time-to-profitability.

3.2.2.CFO characteristics

Unlike CEOs,the role,contributions,and impact of chief financial officers(CFOs)have received scant attention in the academic literature.A notable exception is a study by Mian (2001)who examines factors driving the choice and replacement of CFOs.He argues that the primary responsibility for the management of the financial system lies with the CFO.He points out that the functions of CFOs include preparing financial reports,raising capital, budgeting,tax management,cost management,and participating in the development and execution of financial strategy.Similar to their role in more seasoned firms,CFOs of IPO firms play a major role in communicating with analysts and presenting the firm's financial strategy and projections.Analysts depend on CFOs to provide earnings guidance and a concrete timeline for the firm to generate positive cash flows in order for it to become less reliant on the unpredictable nature of the external financing market for survival.CFOs need to demonstrate the abilities and skills to maintain a rapport with analysts,and instill in them confidence in the reliability and predictability of financial projections.Further,IPOs with high cash burn rates as is the usual case with Internet firms are obviously in need of highly sophisticated financial planning and forecasting systems to ensure that capital is available when needed on the best possible terms.Therefore,having a reputable CFO can be viewed as a strong signal of the firm's ability and intent to use sophisticated financial planning techniques as well as the firm's ability to communicate effectively with financial analysts and institutional investors.

Similar to our analysis of CEOs,we distinguish between general human capital and specific human capital for CFOs.As such,we argue that prior experience in a reputable organization represents a credible signal of CFO quality and,therefore,should be associated with a higher likelihood of attaining post-IPO profitability and shorter time-to-profitability.In addition,we argue that the specific human capital developed by CFOs as a result of experience in the technology sector is valuable in helping develop,communicate, and implement an effective financial strategy for Internet IPO firms and maintain a close Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

watch on the cash burn rate and time-to-profitability.The above discussion forms the basis

for the following hypotheses:

Hypothesis 3C:CFO prior experience in reputable organizations is positively related to

the probability of post-IPO profitability and negatively related to time-to-profitability.

Hypothesis 3D:CFO prior experience in the technology sector is positively related to the

probability of post-IPO profitability and negatively related to time-to-profitability.

3.3.Third party certification

The extant literature has widely recognized the potential for third party certification as a

solution to the information asymmetry problem in the IPO market (Beatty,1989;Carter and

Manaster,1990;Megginson and Weiss,1991;Jain and Kini,1995,1999b;Zimmerman and

Zeitz,2002).The theoretical basis for third party certification is drawn from the signaling

models which argue that intermediaries such as investment bankers,venture capitalists,and

auditors have the ability to mitigate the problem of information asymmetry by virtue of their

reputation capital (Booth and Smith,1986;Megginson and Weiss,1991;Jain and Kini,

1995,Carter et al.,1998).In addition to certification at the IPO,intermediaries,through

their continued involvement,monitoring,and advising role have the ability to enhance

performance after the IPO.In the discussion below,we focus on the signaling impact of

venture capitalists involvement and investment bank prestige on post-IPO outcomes.

3.3.1.Venture capitalist participation

The certification and value added roles of venture capitalists (VC)in legitimizing,

financing,nurturing,developing,monitoring,and ultimately positioning entrepreneurial

firms for an IPO has been widely documented (Barry et al.,1990;Barry,1994;Gorman and

Sahlman,1989;Gompers and Lerner,1997;Wright and Robbie,1998;Arthurs and

Busenitz,2006).The certification role of VCs is derived from their reputation capital as

well as from the rigorous process by which they select ventures that receive financing.As a

result of their access to inside information on the prospects of the firm and with the value of

their reputation capital at stake,VCs are in a credible position to provide certification to

outside investors and bestow legitimacy on the venture firm (Megginson and Weiss,1991;

Jain and Kini,1995).The value added potential of VCs,on the other hand,is derived from

the fact that in addition to providing financing,they are active investors participating in

activities such as raising funds,monitoring managers,serving on the board,participating in

strategic planning,providing financial and operational expertise,and formulating human

resource policies (Gorman and Sahlman,1989;Barry et al.,1990;Sahlman,1990;Lerner,

1997;Gompers and Lerner,1997;Kaplan and Stromberg,2001;Hellman and Puri,2002).

As can be seen from the above discussion,while a substantial body of literature has

focused on the certification and value added role of VCs prior to the IPO,relatively little is

known regarding whether they are able to endow their companies with the capacity to achieve

superior performance after the IPO (Arthurs and Busenitz,2006).Since their compensation is

contingent on the success of their investments and the fact that lock up agreements restrict VC

exit immediately after the IPO,with the average time of exit being in the range of a year and a

half,VCs have a strong incentive to remain engaged in nurturing their portfolio companies

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12 B.A.Jain et al./Journal of Business Venturing xx(2007)xxx–xxx

even after the IPO(Sahlman,1990;Gompers and Lerner,1998;Bradley et al.,2001). Applying a resource based perspective to entrepreneurship,Arthurs and Busenitz(2006) argue that VCs have the capacity to provide their ventures with greater dynamic capabilities during the post-IPO phase,thereby allowing venture managers to more effectively assess how well the firm's resource base is aligned to meet performance objectives as well as to identify adjustments needed to reconfigure the resource base to address the various weaknesses and threats that endanger the survival and success of the firm.Additionally,as a consequence of their industry specialization,reputation,and networks,VCs can provide their venture firm with access to resources from various sources as well as assuage the concerns of these resource providers regarding attempts at opportunism or poor quality decision-making by venture managers(Grant,1996;Stuart et al.,1999;Arthurs and Busenitz,2006).Further,the board of directors of VC-backed firms tend to be more experienced and better positioned to accelerate management's strategic and operational learning,and consequently have greater ability to bring about needed changes and strategic adjustments to the resource base as required by the nature of competition during the post-IPO phase(Rosenstein,1988;Gorman and Sahlman,1989;Sapienza,1992;Barney et al.,1996;Fried et al.,1998).

As such,on the basis of the above discussion,we argue that VC involvement can serve not only as a certification mechanism to ensure a successful IPO but also as an indicator that the firm is well positioned to meet competitive product and capital market challenges during the post-IPO phase.Therefore,we expect:

Hypothesis4:There is a positive relation between VC involvement with the probability of profitability and a negative relation with time-to-profitability.

3.3.2.Investment bank prestige

The vital role performed by lead investment bankers in the IPO process as well as their ability to perform a certification function has been the focus of several studies in the extant literature(Booth and Smith,1986;Beatty and Ritter,1986;Carter et al.,1998;Jain and Kini,1999b).Further,reputable investment banks have the potential to add value during the post-issue phase through their superior monitoring abilities and advisory services in areas such as valuation,mergers and acquisitions,and raising capital.Consistent with these arguments,several studies have found a positive relationship between investment bank prestige and long-run post-IPO investment performance,operating performance,and survival(Carter et al.,1998;Jain and Kini,1999a,b).In line with the above discussion,we would expect that Internet IPO firms marketed by prestigious investment bankers are more likely as well as more quickly able to attain profitability after the IPO compared to Internet IPO firms marketed by less prestigious investment bankers.

Hypothesis4A:Investment bank prestige is positively related to the probability of attaining profitability and negatively related to time-to-profitability.

3.4.Institutional investor demand

Prior to marketing the issue to investors,the issuing firm and their investment bankers are required to file an estimated price range in the registration statement.The final pricing of the IPO firm is typically done on the day before the IPO based upon the perceived demand Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

from potential investors.Further,the final offer price is determined after investment bankers

have conducted road shows and obtained indications of interest from institutional investors.

Therefore,the initial price range relative to the final IPO offer price is a measure of

institutional investor uncertainty regarding the value of the firm.Since institutional

investors typically conduct sophisticated valuation analyses prior to providing their

indications of demand,divergence of opinion on valuation amongst them is a reflection of

the risk and uncertainty associated with the prospects of the IPO firm during the post-IPO

phase.Consistent with this view,Houge et al.(2001)find empirical evidence to indicate

that greater divergence of opinion and investor uncertainty about an IPO can generate short-

run overvaluation and long-run underperformance.Therefore,higher divergence of opinion

among institutional investors is likely to be negatively related to the probability of post-IPO

profitability and positively related to time-to-profitability.

A related issue is the extent of pre-market demand by institutional investors for

allocation of shares in the IPO firm.Higher pre-issue demand represents a favorable

consensus of sophisticated institutional investors regarding the prospects of the issuing

firm.Institutional investor consensus as well as their higher holdings in the post-IPO firm is

likely to be an informative signal regarding the post-IPO prospects of the firm.Therefore,

on the basis of the above discussion,we expect:

Hypothesis 5:Pre-market valuation uncertainty on the part of institutional investors is

negatively related to the probability of profitability and positively related to time-to-

profitability.

Hypothesis 5A:Pre-market institutional demand is positively related to the probability of

profitability and negatively related to time-to-profitability.

4.Sample description and variable measurement

Our initial sample of 325Internet IPOs over the period January 1996to February 2000was

obtained from the Morgan Stanley Dean Witter Internet Research Report dated February 17,

2000.The unavailability of IPO offering prospectuses and exclusion of foreign firms reduces

the sample size to 205firms.Further,to be included in our sample,we require that financial

and accounting information for sample firms is available on the Center for Research in

Security Prices (CRSP)and Compustat files and IPO offering related information is accessible

from the Securities Data Corporation's (SDC)Global New Issues database.As a result of these

additional data requirements,our final sample consists of 160Internet IPO https://www.wendangku.net/doc/0d3267541.html,rmation

on corporate governance variables (ownership,board composition,past experience of the

CEO and CFO),and number of risk factors is collected from the offering prospectuses.

Our final sample of Internet IPO firms has the following attributes.The mean offer price

for our sample of IPO firms is $16.12.The average firm in our sample raised $99.48million.

The gross underwriting fee spread is around seven percent.About 79%of the firms in our

sample had venture capital backing.Both the mean and median returns on assets for firms in

our sample at the time of going public are significantly negative.For example,the average

operating return on assets for our sample of firms is ?56.3%.The average number of

employees for the firms in our sample is 287.The average board size is 6.57for our sample.In

about 7.5%of our sample,the CEO and CFO came from the same firm.In addition,we find

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that59firms representing37%of the sample attained profitability during the post-IPO period with the median time-to-profitability being three quarters from the IPO date.

4.1.Description of variables

Table1provides a summary of the name,variable description,and measurement of each independent variable used in our analyses.The table also identifies the hypothesis that provides the theoretical justification for inclusion of the independent variable and the predicted sign of its relationship with the probability of profitability and time-to-profitability. Table1

Variable description and predicted relations between probability of profitability and time-to-profitability for each explanatory variable

Variable (Hypothesis#)Expected sign for

probability of profitability

(time-to-profitability)

Description Measure

POUT(H1)+(?)Proportion of

outside directors Expressed as a percentage of board size(IPO prospectus)

POUT(H1A)?(+)Proportion of

outside directors Expressed as a percentage of board size(IPO prospectus)

CHTOP3(H2)+(?)Change in ownership

of the top3officers

and directors Change in percentage ownership by the top3officers and directors(IPO prospectus)

CEOAGE(H3)?(+)Age of the CEO Age of the CEO(IPO prospectus)

CEOREP(H3A)+(?)CEO worked for

reputable firm Whether CEO's past experience is with a reputable firm

(IPO prospectus)

CEOIND(H3B)+(?)CEO has related

industry experience Whether CEO has relevant industry experience(IPO prospectus)

CFOREP(H3C)+(?)CFO worked for

reputable firm Whether CFO's past experience is with a reputable firm

(IPO prospectus)

CFOIND(H3D)+(?)CFO has related

industry experience Whether CFO has relevant industry experience(IPO prospectus)

DVC(H4)+(?)Venture capitalist

backed or not Dummy variable which takes the value1if IPO is VC backed

VUNC(H5)?(+)Valuation uncertainty Filing price range/Average

filing price(SDC)

DEMAND(H5A)+(?)Pre-IPO demand Offer price?Average filing

price/Average filing price(SDC) UNDREP(H4A)+(?)Underwriter prestige Carter,Dark,and Singh(1998)

nine-point prestige scale

LSIZE(control)+(?)Log of size of IPO issue Log of gross proceeds raised at

the IPO(SDC)

NUMEMP(control)+(?)Pre-IPO number

of employees Pre-IPO number of employees (IPO prospectus)

FIRMAGE(control)+(?)Age of the firm IPO Year?Founding Year+1

(IPO prospectus)

NUMRISK(control)?(+)Number of

risk factors Number of risk factors listed on the IPO prospectus

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We briefly describe the measurement of the dependent and independent variables used in our

analysis below.

We employ hazard analysis to evaluate the probability that a firm will attain profitability

in the future given that it is currently unprofitable at the present time.We select the widely

used semi-parametric Cox Proportional Hazards (CPH )model to identify variables that

significantly influence the probability of Internet firms attaining post-IPO profitability as a

function of time.A detailed discussion of CPH models is available in Cox (1972).We use

quarterly operating income before depreciation as our measure of operating profitability.

We define the event in our analysis as the attainment of a quarter of operating profitability

after the IPO.In the post-IPO period,firms will either attain profitability,fail,or remain

unprofitable until the end of our tracking period.Censored observations represent IPO firms

that are unable to attain profitability by the end of our tracking period.If a firm has a quarter

of operating profitability after the IPO then we assign it the profitable status and compute

the time-to-profitability as the number of quarters elapsed between the IPO quarter and the

quarter for which the firm first reported operating profitability.The construction of the

dependent variable is on the basis of combining the time to occurrence of event

(profitability)with the dichotomous status variable (attained profitability status versus

remains unprofitable at end of tracking period).The dependent variable in the hazard

model,therefore,denotes the likelihood that an Internet IPO firm will attain profitability in

each period.

We include eleven independent variables in the study.Specifically,board independence,

POUT is computed as the number of outside directors divided by the total board size.The

variable CHTOP3represents the change in the equity ownership of the top three officers

and directors from pre-to-post IPO.9The variable CEOAGE measures the age of the CEO at

the time of the IPO.We collect information on the nature of the CEO's (CFO's)prior

organizational experience,which allows us to determine whether the CEO's (CFO's)

previous employer was a major corporation or dominant firm in its industry.We classify

reputation as high if the previous employer is a Fortune 500firm,bulge bracket investment

bank (CS First Boston,Lehman,Merrill Lynch,Morgan Stanley,Salomon Brothers),Big 5

accounting firm,top-tier consulting firm,or top-tier VC.We use a dummy variable,

CEOREP (CFOREP )that equals one if the CEO's (CFO's)previous employment is with a

reputable firm,otherwise it equals zero.To capture whether the CEO (CFO)has relevant

industry experience,we construct a dummy variable CEOIND (CFOIND )that equals one if

the CEO's (CFO's)previous employment is with a technology firm,otherwise it equals

zero.We measure VCs participation with the dummy variable,DVC that takes on the value

one if the IPO firm is VC-backed,and is zero otherwise.We use the Carter,Dark,and Singh

(1998)nine-point prestige scale as a measure of investment banker reputation (UNDREP ).

We measure valuation uncertainty (VUNC )as the filing price range divided by the average

filing price.Consistent with Hanley (1993),we compute a proxy for pre-market demand

(DEMAND )as the difference in IPO offer price and the expected price divided by the

expected price,where the expected price is simply the mid-point of the filing price range.

9

We designate the three officers and directors owning the highest number of shares prior to the issue as listed in

the Principal and Selling Stockholders section of the IPO prospectus as the top three officers and directors.

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In addition to the above-described independent variables,we include several control variables that proxy for level of information asymmetry,risk,size,stage of development, organizational stability,and legitimacy.We include the number of employees at the IPO (NUMEMP)as a control variable.It proxies for the extent of human capital deployed in the IPO firm.Firms operating in the Internet industry have balance sheets that look considerably different from firms operating in more traditional industries because to a large extent they are less dependent on tangible assets and more reliant on intangible assets such as ideas,knowledge,and creativity.Therefore,one of the main assets for technological firms is their human capital base consisting of developers,programmers,designers,and similar knowledge based workers.As such,we expect the likelihood of attaining post-IPO profitability to be positively related to the number of employees.In addition,consistent with several studies in the IPO literature we include firm size as measured by the natural logarithm of gross proceeds at the IPO(LSIZE)and risk as measured by the number of risk factors listed in the IPO prospectus(NUMRISK)as control variables(Beatty and Zajac, 1994;Jain and Kini,1999a,b;Carter et al.,1998;Certo et al.,2001).

Finally,we include the variable FIRMAGE measured as one plus the age of the firm at IPO as a control variable.Firms that go public prematurely are unlikely to be adequately prepared and financed to withstand the various challenges in the product and financial markets facing newly public firms.Therefore,these firms are less likely to be on the path to achieving profitability compared to firms that had developed sufficiently prior to going public.As such,we expect that the probability of attaining post-IPO profitability is likely to be positively related to the age of the firm at the time of going public.

5.Results

Table2provides the means and correlations among all the variables included in this study.On average,outside directors represented73%of board membership for sample firms.The average decline in pre-to-post ownership of the top three officers/directors was 10.81%.While29.38%of CEOs had prior experience in reputable organizations,only 15.63%of CFOs prior experience was in major corporations.Further,40%of CEOs had prior experience in technology firms compared to31.25%of CFOs.The average age of CEO in the sample was42.15.The correlation matrix for the most part indicates low correlations among the independent variables.

In Table3,we provide a comparison of the characteristics of firms that attain post-IPO profitability versus firms that remain unprofitable during the post-IPO phase.While the mean gross proceeds raised at the IPO for the two groups is not significantly different the median gross proceeds is significantly higher for the unprofitable group.The mean (median)number of risk factors is significantly higher for the unprofitable group of IPO firms.The unprofitable group of firms has significantly higher venture capitalist participation.The average decline in pre-to-post IPO ownership of the top three officers/ directors is13.81%for unprofitable firms versus5.6%for the profitable group and this difference is statistically significant.The mean percentage of outside directors on the board of unprofitable firms is significantly higher(74.74%versus69.98%).There appears to be no difference between the two groups in terms of CEO's and CFO's prior experience in a reputable organization or relevant industry experience.

Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

The results of the estimated Cox Proportional Hazards (CPH )models are reported in

Table 4.The overall model Chi-square statistic,individual variable coefficients,and their

associated p -values are reported for all models.Since the dependent variable is the

logarithm of the hazard rate,a positive coefficient on an explanatory variable in the CPH

model indicates that an increase in the variable is associated with an increase in the hazard

rate and consequently lower duration.In the context of our application,a positive (negative)

coefficient indicates that an increase in the variable leads to an increase (decrease)in the

probability of attaining profitability and a decrease (increase)in the time-to-profitability.

Therefore,in the discussion of the results that follows,we will describe the effect of each

independent variable only on the probability of attaining profitability with the implicit

understanding that its effect on the time-to-profitability is opposite to that on the probability

of profitability.Further,for each of the estimated models in Table 4,the first column

Table 3

Differences in characteristics based on whether the firm achieves post-IPO operating profitability

Variables

Unprofitable mean (median)Profitable mean (median)Difference t -stat (z -stat)SIZE ($m.)

100.36(75.00)97.96(59.50)?0.11(?2.64a )FIRMAGE (years)

4.92(4.00)7.60(

5.00) 1.58(1.52)NUMRISK

32.99(33.00)28.64(28.00)?4.07a (?3.82a )NUMEMP

225.62(159.00)393.32(210.00) 1.73c (1.78c )VUNC (%)

17.53(18.18)17.22(18.18)?0.56(?0.51)DEMAND (%)

35.11(33.33)33.95(28.57)?0.19(?0.57)UNDREP

8.77(8.88)8.46(8.88)?1.24(1.25)DVC (%)

84.16(100.00)69.49(100.00)?2.21b (?2.18b )ALPHA (%)

59.59(62.86)71.93(75.51) 2.65a (1.89c )CHTOP3(%)

?13.81(?5.29)?5.60(?1.77) 3.75a (1.68c )POUT (%)

74.76(77.78)69.98(71.43)?2.10b (?2.31b )CEOIND (%)

42.57(0.00)35.59(0.00)?0.87(?0.86)CEOREP (%)

27.72(0.00)32.20(0.00)0.60(0.60)CEOAGE (years)

42.50(42.00)41.56(40.00)?0.78(?1.49)CFOIND (%)

31.68(0.00)30.51(0.00)?0.15(?0.15)CFOREP (%)18.81(0.00)10.17(0.00)?1.55(?1.45)

Note:The table reports differences in means (medians)of various characteristics based on whether the IPO firm

achieves post-IPO operating profitability using a sample of 160IPO issuers over the period January 1996through

February 2000.The time-to-profitability is measured as the number of quarters elapsed between the IPO quarter

and the quarter in which the firm's operating profit is first positive after the IPO .SIZE is the gross proceeds raised

at the IPO.FIRMAGE is the difference between the IPO year and the founding year plus one.NUMRISK is the

number of risk factors listed in the IPO prospectus.NUMEMP is the pre-IPO number of employees.VUNC is the

IPO filing price range over the average filing price.DEMAND is the difference between the IPO offer price and the

average filing price divided by average filing price.UNDREP is a measure of the investment banker prestige using

the Carter,Dark and Singh nine-point measure.DVC is a dummy variable that takes the value 1if there is venture

capitalist participation,else 0otherwise.ALPHA is the proportion of equity retained by the original entrepreneurs

(including venture capitalists).CHTOP3is the change in the ownership percentage around the IPO for the top three

officers and directors.POUT is computed as the ratio of number of outside directors to board size.CEOIND

(CFOIND )is an indicator variable that takes the value 1if the CEO (CFO)has relevant industry experience,else 0

otherwise.CEOREP (CFOREP )is an indicator variable that takes the value 1if the CEO (CFO)past experience is

with a reputable firm,else 0otherwise.CEOAGE is the age of the CEO.The differences in means (median)are

computed using a t -test (Wilcoxon two-sample z -test).

a Significant at the 0.01level;

b significant at the 0.05level;and

c significant at the 0.10level.

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contains the estimated coefficients and the second column reports the hazard ratios associated with the explanatory variables.

The first model in Table4includes the four control variables FIRMAGE,LSIZE,NUM-RISK,and NUMEMP.The coefficients of FIRMAGE and NUMEMP are positive and significant at the one percent level while the coefficients of LSIZE and NUMRISK are significantly negative at the1%and5%levels,respectively.Overall,the results in model1 indicate that an increase in the size of the IPO offering(LSIZE)or the number of risk factors listed on the IPO prospectus(NUMRISK)are associated with a decrease in the probability of attaining profitability,while an increase in the age of the firm(FIRMAGE)or the number of employees(NUMEMP)at the IPO is associated with an increase in the probability of attaining the profitable state.

In Model2,in addition to LSIZE,FIRMAGE,NUMRISK,and NUMEMP,we include measures of valuation uncertainty(VUNC)and institutional demand for the IPO issue (DEMAND)as independent variables.The results indicate that the coefficient of VUNC is significantly negative at the10%level indicating that an increase in institutional investor uncertainty regarding the value of the Internet IPO firm reduces the probability of post-IPO profitability and this result is supportive of Hypothesis5.Similarly,the results from Model2 indicate that the coefficient of DEMAND is positive and significant at the one percent level. Therefore,stronger institutional demand for the offering in the pre-market is associated with a higher probability of attaining profitability and is supportive of Hypothesis5A.

In Model3,we include underwriter reputation(UNDREP)and VC participation(DVC) as additional explanatory variables to those used in Model1to evaluate the effect of third party certification on the probability of post-IPO profitability.We find that the coefficient on UNDREP is insignificant indicating that Hypothesis4A is not supported.Further,the coefficient on DVC is significantly negative at the10%level,which is opposite to the prediction from Hypothesis 4.The negative coefficient on DVC indicates that VC participation decreases the probability of attaining the post-IPO profitability state.

In Model4,in addition to LSIZE and FIRMAGE,we include the independent variables CHTOP3,POUT,CEOIND,CEOREP,CEOAGE,CFOIND,and CFOREP.The results indicate that the coefficient of POUT is negative and significant indicating that an increase in the proportion of outsiders on the board of an Internet company results in lowering the probability of attaining post-IPO profitability.The results do not support Hypothesis1but instead support Hypothesis1A.The coefficient on CHTOP3is significantly positive at the one percent level indicating that the higher the change in percentage ownership by the top managers at the time of the IPO,which implies a smaller reduction in their percentage ownership,the higher is the probability of reaching the profitability state after the IPO as predicted by Hypothesis2.

The results with CEO age indicate that the coefficient of CEOAGE is negative but not significant.The coefficient of CEOREP while positive is not significant at traditional levels of significance.On the other hand,the coefficient of CEOIND is negative and significant. Further,while the coefficients on both CFOREP and CFOIND are negative,only the coefficient on CFOREP is significantly different from zero.In Model5,we include all the explanatory variables used in our analyses.The results in Model5are similar to those in Models1–4with a few noteworthy exceptions.While the coefficient on NUMRISK, CEOIND,and CFOREP are still negative,they are no longer statistically significant.The Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing(2007),doi:10.1016/j.jbusvent.2007.02.004

上市公司盈利能力分析外文文献

The path-to-profitability of Internet IPO firms ☆ Bharat A.Jain a,1,Narayanan Jayaraman b,2,Omesh Kini c,? a College of Business and Economics,Towson University,Towson,MD 21044,United States b College of Management,Georgia Institute of Technology,Atlanta,GA 30332,United States c Robinson College of Business,Georgia State University,Atlanta,GA 30303,Unite d States Received 1October 2006;received in revised form 1December 2006;accepted 1February 2007 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 increase in the proportion of technology firms going public.Since there is considerable uncertainty regarding the long-term economic viability of these firms at the time of going public,identifying factors that influence their ability to attain key post-IPO milestones such as achieving profitability represents an important area of research. 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 theoretical framework significantly impact the probability of post-IPO profitability as a function of time.We find that the probability of post- IPO profitability increases 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 decreases with the venture capital participation,proportion of outsiders on the board,and pre-market valuation uncertainty. ?2007Published by Elsevier Inc. Keywords:Initial public offerings;Internet firms;Path-to-profitability;Hazard models; Survival Journal of Business Venturing xx (2007)xxx –xxx MODEL 1A JBV-05413;No of Pages 30☆ We would like to thank Kalpana Narayanan,Raghavendra Rau,Sankaran Venkataraman (Editor),Phil Phan (Associate Editor),two anonymous referees,and participants at the 2002Financial Management Association Meetings in San Antonio for helpful comments.We thank Paul Gilson and Sandy Lai for excellent research assistance.The usual disclaimer applies.?Corresponding author.Tel.:+14046512656;fax:+14046522630. E-mail addresses:bjain@https://www.wendangku.net/doc/0d3267541.html, (B.A.Jain),narayanan.jayaraman@https://www.wendangku.net/doc/0d3267541.html, (N.Jayaraman), okini@https://www.wendangku.net/doc/0d3267541.html, (O.Kini). 1Tel.:+14107043542;fax:+14107043454. 2Tel.:+14048944389;fax:+14048946030. 0883-9026/$-see front matter ?2007Published by Elsevier Inc. doi:10.1016/j.jbusvent.2007.02.004 ARTICLE IN PRESS Please cite this article as:Jain,B.A.et al.The path-to-profitability of Internet IPO firms.Journal of Business Venturing (2007),doi:10.1016/j.jbusvent.2007.02.004

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一、引言 根据马来西亚上市公司的要求欺诈的公司被囊定为犯罪认定。欺诈是在实践中出现的一种欺诈行为，广义的概念具有两种基本类型。首先是挪用资产，二是财务报告舞弊。财务报告舞弊通常发生在以财务报表造假的形式来获得一些有益的形式。有些人认为欺诈涉及财务报表故意的扭曲（硬盘接口技术2009）。 在财务报告过程中欺诈检测是资本市场参与者和其他利益相关者的首要任务（例如，埃利奥特，2002；委员会，2007）。在公开上市交易的公司如安然和世通公司欺诈发生时市场参与者如投资者经历了重大的经济损失。一些专家认为，在目前的经济衰退调查研究诈骗方式中财务报告舞弊率可能会增加（敏茨，2009）。 在ISA 240规定的欺诈检测是一个分配给审计人员具体任务。审计人员通常使用帮助他们检测欺诈的工具称为分析程序（阿尔布雷克特，2009）。分析程序是指重要比率分析和趋势分析以及由此产生的调查，与其他相关信息不一致或偏离预测值波动的关系。许多研究者和诈骗者推荐的财务比率可以作为一个有效的工具来检测欺诈（印度野，2009；白，阴阳，2008；人，1995）。 本文的目标是，首先探讨舞弊和非舞弊公司的财务比率的平均值之间的差异；其次本文研究的是欺诈报告中的财务比率的特征。

外文文献企业盈利能力分析

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银行盈利能力分析中英文对照外文翻译文献

银行盈利能力分析中英文对照外文翻译文献(文档含英文原文和中文翻译)

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在环境快速变化的情况下，这些变化给在欧盟的银行带来很大的挑战，因此影响了他们的效能。格林指出，充足的收益是必要的条件让银行保持偿付能力,在一个合适的环境生存、发展和繁荣。考虑到银行业的健康发展和经济知识增长，影响银行的盈利能力的潜在因素不仅和管理者有关，而且和众多利益相关者如中央银行,银行家协会、政府以及其他金融当局有关。 2 文献综述 参考文献与本文可分为三大类。第一部分是研究集中于银行的盈利能力的决定因素。第二部分包括研究欧洲银行的利润和成本效率。第三由研究比较国内外银行。在下面几个部分中,我们讨论这些类别中的每一个。 3 决定因素和变量选择 3．1 因变量 本研究使用平均资产回报率(ROAA)来评估银行的性能。ROAA是把净利润表示为一个百分比的平均总资产。它显示了每欧元资产获得的利润并指明如何有效的银行的资产去设法创造收益。平均资产是用来在会计年度中发现发现资产上的任何差异。Golin(2001)指出,平均资产回报率是衡量盈利能力的关键。 3．2 决定因素和独立变量 四个银行特征用作内部决定因素。这些都是银行的总资产、成本收入比、权益与资产比率和银行的贷款的比率除以客户和短期融资。此外,六个外部因素是用来检查环境的影响对银行的表现。

九阳股份有限公司财务报表分析-盈利能力分析毕业论文

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学位论文原创性声明 本人郑重声明：所呈交的论文是本人在导师的指导下独立进行研究所取得的研究成果。除了文中特别加以标注引用的内容外，本论文不包含任何其他个人或集体已经发表或撰写的成果作品。对本文的研究做出重要贡献的个人和集体，均已在文中以明确方式标明。本人完全意识到本声明的法律后果由本人承担。 作者签名：日期：年月日 学位论文版权使用授权书 本学位论文作者完全了解学校有关保留、使用学位论文的规定，同意学校保留并向国家有关部门或机构送交论文的复印件和电子版，允许论文被查阅和借阅。本人授权大学可以将本学位论文的全部或部分内容编入有关数据库进行检索，可以采用影印、缩印或扫描等复制手段保存和汇编本学位论文。 涉密论文按学校规定处理。 作者签名：日期：年月日 导师签名：日期：年月日

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Abstract 中、英（外）文论文（设计）摘要及关健词 摘要是论文（设计）的容不加注释和评论的简短述 论文（设计）的主要容 论文（设计）的主要观点 论文（设计）的主要贡献（创新） 中文摘要要求不低于200字；英（外）文摘要可在中文摘要的基础上缩写。 在中、英（外）文摘要结尾处另起行加“关键词”，对论文（设计）的容进一步提炼，以便于检索。

目录 －、第一级标题............................................................... （一）第二级标题.......................................................... 1、第三级标题........................................................ （二）第二级标题.......................................................... 1、第三级标题......................................................... 二、第一级标题............................................................... （一）第二级标题.......................................................... 1、第三级标题........................................................ （二）第二级标题.......................................................... 1、第三级标题......................................................... 2、第三级标题......................................................... 附录 ......................................................................... 文献综述...................................................................... 参考文献...................................................................... 致谢 ......................................................................... 目录要求： 另起页。目录为五号宋体字；自动生成检索的目录。 一级标题格式：一、二、三、四、 二级标题格式：（一）（二）（三）（四） 三级标题格式：1、 2、 3、 4、 四级标题格式：（1）（2）（3）（4）

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