Comments: Does the Involvement of Expert Intermediaries Improve the After market Survivability of IPO Firms? Evidence from Industry Specialist Auditors and Reputable Venture Capitalists Ting-Kai Chou, Jia-Chi Cheng, Chin-Chen Chien Department of

1
Comments Does the Involvement of Expert
Intermediaries Improve the After market
Survivability of IPO Firms? Evidence from
Industry Specialist Auditors and Reputable
Venture CapitalistsTing-Kai Chou, Jia-Chi
Cheng, Chin-Chen Chien Department of Accounting,
National Cheng-Kung University

• Discussant Huimin Chung
• National Chiao Tung University

2
Main Results

• This study examines the impact of industry
  specialist auditors and reputable venture
  capitalists on post-issue survival of initial
  public offering (IPO) firms.
• Sample period 1991-2000.
• Analyze the relationship between the involvement
  of expert intermediaries and the probability of
  delisting and time duration of post-IPO failure.
• Employ both the logistic and semi-parametric Cox
  proportional hazard model for empirical purpose.
• Show that IPO firms associated with industry
  specialist auditors or highly reputable venture
  capitalists are less likely to delist and exhibit
  longer time period of survival.

3
Main results (2)

• Expert market intermediaries help startups in
  their resource acquisitions for successful
  development, which in turn enhance the
  aftermarket survivability of IPO issuing firms.
• The study provides evidences on the value of
  reputable intermediaries involvement on
  subsequent survival of newly listed firms.

4
Comments

• The role of auditor with good reputation
• Contrary to the traditional use of binary
  variable for big-six/ non-big six, the authors
  argue that auditors with industry specialization
  are more important in predicting after-IPO
  delisting
• Dunn and Mayhew (2004)
• Industry specialization plays an increasing
  important role in audit quality
• Highly reputable venture capitalists
• Firms backed by prestigious VCs in the IPO
  process are less likely to be delisted from the
  stock exchange.
• A reputed VC will bring greater expertise and
  resources to the firm.

5

• It would be better to point out the significance
  of the economic costs of delisting first in order
  to motivate the importance in the studies of
  prediction of delisting after IPO.
• Explain more on the contributions over the
  previous literature such as Jain and Kini (2001).

6

• Logit and Hazard models in modeling after-IPO
  delisting
• Hazard model is more suitable for examining the
  delisting of IPO firms.
• Provide more explanations on the advantage of
  using Hazard model
• Proportional Hazard and Hazard
• Shumway (2001) discusses the advantages of using
  Hazard model.

7
(No Transcript)
8

• It would be good to see some robustness of Table
  6.
• For example, the interaction terms
• 1998-2000 Internet booming period