Scandinavian Working Papers in Economics

SIFR Research Report Series,
Institute for Financial Research

No 36: What are Firms? Evolution from Birth to Public Companies

Steven N. Kaplan (), Berk A. Sensoy and Per Strömberg ()
Additional contact information
Steven N. Kaplan: University of Chicago, Postal: Graduate School of Business, 5807 South Woodlawn Avene, Chicgo, IL 60637, USA
Berk A. Sensoy: University of Chicago
Per Strömberg: Swedish Institute for Financial Research, Postal: Swedish Institute for Financial Research, Saltmätargatan 19A, SE-113 59 Stockholm, Sweden

Abstract: We study how firm characteristics evolve from early business plan to initial public offering to public company for 49 venture capital financed companies. The average time elapsed is almost 6 years. We describe the financial performance, business idea, point(s) of differentiation, non-human capital assets, growth strategy, customers, competitors, alliances, top management, ownership structure, and the board of directors. Our analysis focuses on the nature and stability of those flrIn attributes. Firm business lines remain remarkably stable from business plan through public company. Within those business lines, non-human capital aspects of the businesses appear more stable than human capital aspects. In the cross-section, firms with more alienable assets have substantially more human capital turnover.

Keywords: Theory of the firm; Entrepreneurship; Venture capital; Firm life cycle

JEL-codes: G24; L20; M13

55 pages, October 15, 2005

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