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

Forthcoming, Entrepreneurship Theory and Practice

67 Pages Posted: 12 Jun 2018 Last revised: 15 Jan 2025

See all articles by Onur Bayar

Onur Bayar

University of Texas at San Antonio - Alvarez College of Business

Thomas J. Chemmanur

Boston College - Carroll School of Management

Harshit Rajaiya

University of Ottawa - Telfer School of Management

Xuan Tian

Tsinghua University - PBC School of Finance

Qianqian Yu

Lehigh University

Date Written: September 9, 2018

Abstract

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

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/

Harshit Rajaiya

University of Ottawa - Telfer School of Management ( email )

136 Jean-Jacques Lussier Street
Ottawa, Ontario K1N 6N5
Canada

Xuan Tian

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China
+86-10-62794103 (Phone)

HOME PAGE: http://xuantian.info/

Qianqian Yu

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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