@techreport{NBERw14602,
 title = "Conveying Quality and Value in Emerging Industries:  Star Scientists and the Role of Learning in Biotechnology",
 author = "Matthew J. Higgins and Paula E. Stephan and Jerry G. Thursby",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "14602",
 year = "2008",
 month = "December",
 URL = "http://www.nber.org/papers/w14602",
 abstract = {Managers of private entrepreneurial firms face obstacles in raising capital both in placing a value on a firm and conveying value to investors.  These problems are exacerbated when the firm is small, has limited assets (except for human capital) and has yet to have a lead product.  In such cases metrics are necessary to convey the value of the firm to investors.  Here we explore the importance within the biotechnology industry of the non-financial metrics firms used to convey value during two important initial public offerings (IPO) windows (1989 to 1992 and 1996 to 2000).  We also examine whether there was a change over time in the importance of various metrics in determining the value of a biotechnology firm.  We find that firms with an affiliated Nobel laureate succeeded in raising the value of their firms by more than $30 million compared to firms without a Nobel laureate during the first period, suggesting that a Nobel laureate served as a powerful signal of firm value.  Our results also suggest that the biotechnology regime changed and the Nobel Prize lost its luster as a signal of value in the second period.  The importance of several other non-financial metrics changed as well.  We conclude that these non-financial metrics of value change in relative importance to potential investors and financial markets as learning occurs and as an industry matures.},
}