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The effect of trademark breadth on IPO valuation and post-IPO performance: an empirical investigation of 1510 European IPOs
Institution:1. Interdisciplinary Centre for Security, Reliability and Trust (SnT), University of Luxembourg, 29, Avenue John F. Kennedy, 1855, Luxembourg, Luxembourg;2. University of Bergamo, Department of Management, Information and Production Engineering, via Pasubio 7b, 24044 Dalmine, Italy;3. University of Bergamo, Department of Management, Via dei Caniana, 2, 24127 Bergamo, BG, Italy;4. Trier University, Faculty of Management, 54296 Trier, Germany;5. Erasmus School of Economics, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, the Netherlands;1. University of Toronto, Canada;2. University of Pennsylvania, United States of America;1. Martin J. Whitman School of Business, Syracuse University, United States of America;2. Joseph M. Katz Graduate School of Business, University of Pittsburgh, United States of America;1. Rawls College of Business, Texas Tech University, USA;2. College of Business, Colorado State University, USA;3. Ivey Business School, Western University, Canada;4. Gustavson School of Business, University of Victoria, Canada;1. Department of Entrepreneurship & Emerging Enterprises, Whitman School of Management, Syracuse University, USA;2. Department of Economics, Grove City College, USA;3. Department of Management, College of Business, Florida Atlantic University, USA;1. School of Business, Renmin University of China, China;2. Kelley School of Business, Indiana University, United States of America
Abstract:Trademarks differ in breadth and can cover a wide range of categories of goods and services. We draw on real options theory and argue that greater trademark breadth constitutes a valuable real option that is associated with higher firm valuation and performance. We analyze a sample of 1510 firms that went public in Europe between 2002 and 2015 and find a positive effect of trademark breadth on initial public offering (IPO) valuation and post-IPO performance. We implement a contingency analysis to contrast real options and signaling theory and find stronger support for the real options perspective.
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