Value Creation in New Firms: Evidence from the Biotechnology Industry

Abstract

The purpose of this study is to empirically examine those factors that enhance the value of newly public firms. The article presents a model for the market value of a newly public biotechnology firm. Explanatory variables include several intangible indicators of the scientific capabilities of the firm including firm citations, licenses, patents, products in the pipeline, and R&D intensity. Top management team variables are also examined. The results support the conclusion that scientific capabilities significantly impact the value of the firm as viewed by public equity markets.