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What are Firms? Evolution from Birth to Public Companies

57 Pages Posted: 19 Oct 2005 Last revised: 30 Oct 2014

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Berk A. Sensoy

Vanderbilt University - Finance

Per Strömberg

Swedish House of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 2005

Abstract

We study how firm characteristics evolve from early business plan to initial public offering to public company for 49 venture capital financed companies. The average time elapsed is almost 6 years. We describe the financial performance, business idea, point(s) of differentiation, non-human capital assets, growth strategy, customers, competitors, alliances, top management, ownership structure, and the board of directors. Our analysis focuses on the nature and stability of those firm attributes. Firm business lines remain remarkably stable from business plan through public company. Within those business lines, non-human capital aspects of the businesses appear more stable than human capital aspects. In the cross-section, firms with more alienable assets have substantially more human capital turnover.

Suggested Citation

Kaplan, Steven N. and Sensoy, Berk A. and Strömberg, Per, What are Firms? Evolution from Birth to Public Companies (August 2005). NBER Working Paper No. w11581. Available at SSRN: https://ssrn.com/abstract=795265

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
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773-702-4513 (Phone)
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National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Berk A. Sensoy

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Per Stromberg

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

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