The quality of top management has a greater impact on the valuation of Internet companies at an initial public offering than financials, according to a paper written by Thomas Dean, management professor at the University of Colorado at Boulder Leeds School of Business.
Dean's research found that because Web-based ventures often lack physical assets characteristic of non-Web-based ventures -- such as a plant or equipment and, in some cases, a tested product -- the management team's knowledge and experience is the leading determinant of a company's value.
"The research suggests that in Web-based ventures where traditional financial measures have less appealing magnitudes, investors place greater importance on the characteristics of the top management teams in their evaluation of the strategic value of the venture," said Dean.
Dean's paper, "Top Management Teams and Investors' Valuation of Initial Public Offerings: An Examination of Web-based and non-Web-based New Ventures," won the Irene M. McCarthy Award for Excellence in Research at the 2001 Babson College/Kauffman Foundation Entrepreneurship Research Conference. The award was for best paper in the Internet-related entrepreneurship category.
All papers were evaluated by three reviewers based on the importance of the topic for entrepreneurship research and practice, the clarity of the empirical method and the freshness of the topic. CU-Boulder is a co-sponsor and host of the 2002 Babson College/Kauffman Foundation Entrepreneurship Research Conference to be held on campus June 5-8.
Dean's research interests include the influence of organizational concepts on new venture creation, strategy and performance. He earned his doctorate degree from CU-Boulder.