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Discussant: Huimin Chung National Chiao Tung University

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 Accounting, National Cheng-Kung University.

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Discussant: Huimin Chung National Chiao Tung University

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

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