Profs signaling IP still running amok!

Notwithstanding a comment on IPBiz, the link to the paper Patent Signaling, Entrepreneurial Performance, and Venture Capital Financing is working fine.

The abstract states:

This work draws on comprehensive patent data for VC-backed firms in the U.S. from
1976 through 2005 to empirically examine the signaling effect of start-up firms’ patents
on entrepreneurial performance and financing patterns of venture capitalists (VCs). Start-
up firms that successfully file patents before receiving any VC investment are more likely
to complete IPOs (initial public offerings) and less likely to fail or be acquired. Such
prior patenting helps VC investees to receive substantially more VC funding, attract a
larger number of more prominent VCs, and experience a longer incubation period. The
propensity of patenting is related to information asymmetry in the market: start-up firms
tend to file patents when the degree of information asymmetry in the public market is
higher. These results are robust to instrumental regressions that use public firms’
patenting choices as the instrument. Our empirical evidence therefore suggests that
patenting serves as an effective signaling device for mitigating the asymmetric
information problem between entrepreneurs and VCs.