When academia comes to market: does university affiliation reduce the uncertainty of IPOs?

Companies obtain significant benefits and resources from university affiliations. Building on recent contributions in the fields of organizational theory and signaling theory, we argue that such relationships redresses investors’ concerns over the legitimacy of firms and acts as an uncertaintyreducing signal. We study the population of university spin-offs that went public in Europe over the last decade, and find that academic affiliation reduces uncertainty and enhances survivability in the long term. Thus, external stakeholders consider this affiliation a valuable and non-substitutable resource. Our results control for a number of characteristics related to firm quality, including measures of intellectual and relational capital as well as corporate governance mechanisms.