Trademarks and Entrepreneurial Firm Success: Theory and Evidence from Venture Capital Investments in Private Firms and Initial Public Offerings

We theoretically model an entrepreneur’s choice of his firm’s products to trademark, the relation between the number of trademarks and VC investment staging, long-run operating performance, and successful firm exit probability. We test model predictions using a large dataset of trademarks registered by VC-backed private US firms. We find that firms with a larger number of trademarks at first VC investment have a smaller number of VC financing rounds; have larger long-run sales and employment; and have greater probabilities of successful exit (IPO or acquisition). Our IV analysis demonstrates that more trademarks causally enhance firm performance and reduce VC staging.

Keywords: Trademarks; Initial Public Offerings (IPOs); Valuation; Private Firm Exit; Post-IPO Operating Performance

JEL Classification: G23, G24, L26, O34

Suggested Citation: Suggested Citation

Bayar, Onur and Chemmanur, Thomas J. and Rajaiya, Harshit and Tian, Xuan and Yu, Qianqian, Trademarks and Entrepreneurial Firm Success: Theory and Evidence from Venture Capital Investments in Private Firms and Initial Public Offerings (September 9, 2018). Forthcoming, Entrepreneurship Theory and Practice, Available at SSRN: https://ssrn.com/abstract=3183879 or http://dx.doi.org/10.2139/ssrn.3183879

Onur Bayar

University of Texas at San Antonio - Alvarez College of Business ( email )

The University of Texas at San Antonio
One UTSA Circle
San Antonio, TX 78249
United States
210-458-6837 (Phone)
210-458-6320 (Fax)

Thomas J. Chemmanur (Contact Author)

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/