When Academia Comes to Market: Does University Affiliation Reduce the Uncertainty of IPOs?

Abstract

Companies obtain significant benefits and resources from university affiliations. Building on recent contributions in organizational theory and signalling theory, the authors argue that such relationships redress investors' concerns over the legitimacy of firms and act as an uncertainty-reducing signal. They study the population of university spin-offs that have gone public in Europe over the last decade, and find that academic affiliation reduces uncertainty and enhances the chances of survival in the long term, controlling for characteristics related to firm quality, including measures of intellectual and relational capital as well as corporate governance mechanisms. Thus, external stakeholders consider academic affiliation as a valuable and non-substitutable resource.