Younger Firms (younger + firm)

Distribution by Scientific Domains

Selected Abstracts

IPO Prospectus Information and Subsequent Performance

Harjeet S. Bhabra
G3/G32 Abstract Initial public offerings underperform in the long run; however, there is very little evidence on their cross-sectional variation. Using a random sample of IPOs from 1987 through 1991 and gathering their prospectus data, we show that financial and operating characteristics as well as offering characteristics have a limited relation with the one-year stock returns. We also find that firms that subsequently reissue equity or merge outperform their matched-firm benchmarks over three years. Underperformance is most severe for the smaller and younger firms. We find that prospectus information is more useful to predict survival/failure compared to subsequent equity offerings or acquisitions. [source]

The Credibility of Voluntary Disclosure and Insider Stock Transactions

ABSTRACT We examine stock price reaction to voluntary disclosure of innovation strategy by high-tech firms and its relation with insider stock transactions before the disclosure. We find that, despite the qualitative and subjective nature of strategy-related disclosure, there is positive stock price reaction to the disclosure. The evidence suggests that investors view the disclosure as credible good news. We also find that the disclosure is associated with more positive stock price reaction when it is preceded by insider purchase transactions. This evidence is consistent with insider purchase enhancing the credibility of the disclosure. The credibility-enhancing effect is found to be stronger for firms with higher degrees of information asymmetry (younger firms, firms with lower analyst following, loss firms, and firms with higher research and development (R&D) intensity). Our evidence also indicates that predisclosure insider purchase is associated with greater future abnormal returns, suggesting that managers are privy to good news shortly before the disclosure. [source]

What's in a Standard Form Contract?

An Empirical Analysis of Software License Agreements
The vast majority of commercial transactions are governed by standard form contracts, but little is known about their actual content and the determinants of that content. This article provides a comprehensive empirical analysis of an important class of modern standard form contracts,software license agreements. In a sample of 647 licenses for software from various markets, I document the prevalence of terms relating to license acceptance, license scope, limitations on transfer, warranties, limitations on liability, maintenance and support, and conflict resolution. I find that almost all licenses display a net bias, relative to relevant default rules, in favor of the software company (the contract writer). I also investigate firm- and buyer-type determinants of the net bias. Larger and (controlling for size) younger firms offer more one-sided terms. Firms offer similar terms to both business buyers and members of the general public. In addition to providing new insight about the nature of standard form contracts, the results may inform efforts to draft new default rules to govern software transactions. [source]

Uncertainty and Information Search Activities: A Study of Owner,Managers of Small High-Technology Manufacturing Firms

Jeffrey E. McGee
This study examines the relationship among perceived strategic uncertainty (PSU), environmental scanning, and the information sources used by owner,managers of a sample of 153 small high-technology manufacturing firms. The results suggest that increased scanning activities are associated with high levels of PSU. Perhaps most importantly, the results also suggest that owner,managers of younger firms respond to uncertainty differently than their counterparts in more mature firms. Specifically, owner,managers of younger firms appear to respond to higher PSU by relying more heavily on personal and external information sources. Owner,managers of older firms, on the other hand, rely more heavily on internal and impersonal information sources to address environmental uncertainty. [source]

Minority Business Access to Mainstream Markets

Timothy Bates
As minority-owned firms have penetrated the broader national marketplace,selling goods and services to corporate as well as government clients,the issue of capacity has surfaced. Particularly in government markets, one claim is that minority business enterprises (MBEs) are smaller, younger firms than nonminorities, and hence they often lack the capacity to compete effectively for government contracts. Affirmative action procurement programs, in this view, provide preferential treatment for less qualified businesses, generating reverse discrimination against the dominant, typically white-male group of business owners. A counterclaim, put forth by proponents of preferential procurement programs, is that discriminatory barriers such as entrenched old-boy networks impede MBE expansion into mainstream markets. Do the entrenched networks really thwart MBEs, or do they simply lack the capacity to compete? Empirical findings of this study support the discriminatory barrier explanation. [source]