What are Firms? Evolution from Birth to Public Companies

59 Pages Posted: 24 Oct 2005

See all articles by Steven N. Kaplan

Steven N. Kaplan

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

Per Strömberg

Swedish House of Finance

Berk A. Sensoy

Vanderbilt University - Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 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 six 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.

Keywords: Entrepreneurship, theory of the firm, venture capital

JEL Classification: D21, D23, G24

Suggested Citation

Kaplan, Steven Neil and Stromberg, Per and Sensoy, Berk A., What are Firms? Evolution from Birth to Public Companies (September 2005). CEPR Discussion Paper No. 5224. Available at SSRN: https://ssrn.com/abstract=831846

Steven Neil Kaplan

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
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National Bureau of Economic Research (NBER)

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Per Stromberg (Contact Author)

Swedish House of Finance ( email )

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111 60 Stockholm
Sweden

Berk A. Sensoy

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

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