Abstract
This paper examines the effect of Venture Capital (VC) reputation on the survival profile of U.S. Initial Public Offerings (IPOs) firms for the 1985-2005 period. To do so, we construct a VC quality index and develop multinomial logit models based on the information contained in the prospectus. The main findings of the paper are that VC reputation does indeed improve the IPO survival profile. While we find that leaving money on the table is a bad survival signal, we confirm that having a prestigious underwriter to market the issue is a good survival signal. Further, we find that Sarbanes-Oxley Act adoption has a positive effect on IPO survival. We also confirm our result after controlling for self selection bias and estimating an accelerated-failure-time model as robustness tests.
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