91 Pages Posted: 28 Jul 2010 Last revised: 12 May 2014
Date Written: December 24, 2012
We construct a mortality table for U.S. public companies during 1985–2006. We find that firms’ age-specific mortality rates initially increase, peaking at age three, and then decrease with age, implying that the first three years of public life are critical. Financial intermediaries involved around the public birth of a firm — venture capitalists (VCs) and high-quality underwriters — are associated with lower firm mortality rates, sometimes for up to seven years after the IPO. VCs reduce mortality rates more through natal financial care than through selection, whereas high-quality underwriters affect firm mortality more through selection.
Keywords: firm mortality, survival risk, initial public offerings, underwriters, venture capital
JEL Classification: D21, D53, E32, G24, G33
Suggested Citation: Suggested Citation
Bhattacharya , Utpal and Borisov, Alexander and Yu, Xiaoyun, Firm Mortality and Natal Financial Care (December 24, 2012). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1649732 or http://dx.doi.org/10.2139/ssrn.1649732
By Kevin Murphy