A recent study of US IPOs from 1986 through early 2000, conducted by Cap Gemini Ernst & Young, found that “new economy” firms that promoted the use of non-financial measures did worse when evaluated by those same measures. This compounds their well-documented failure to provide meaningful financial returns and confirms the importance of identifying, measuring, and disclosing appropriate intangible value drivers.
Furthermore, the study found that the factors driving IPO success have stayed relatively constant over time and are strongly connected to intangibles such as good management practices, rather than based only upon the promise of new technology. In addition, the results of the CGEY study run counter to many other popular perceptions about the size and age of companies that conduct IPOs.
Author: Jon Low
Source: CGE&Y Center for Business Innovation (CBI)
Subjects: Accounting, Finance
Industry: Investment Banking
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