Standing out from the crowd: the visibility-enhancing effects of IPO-related signals on alliance formation by entrepreneurial firms

In this study, we explore how multiple signals related to entrepreneurial companies at the time of their initial public offering (IPO) influence the firms' ability to acquire non-financial resources over time. Specifically, the study looks at how signals based on investors' initial reactions to the IPO, analyst coverage and affiliations with experienced venture capitalists and prominent underwriters combine to enhance the IPO firm's visibility and reduce uncertainty, thereby influencing its ability to form post-IPO alliances. We also consider the extent to which the effects of each of the signals are sustained or diminish over time.Their analysis of 404 IPOs conducted by technology companies between 1995 and 2000 shows that these signals are positively related to alliance formation patterns, and that the effects of these signals deteriorate at different rates over time.