From liability to asset: A receiver's perspective on eponymy signals and market value

Drawing on signaling theory and literatures from eponymy and branding, we take a receiver's perspective to explicate how signaling eponymy impacts venture market value at harvest. To untangle the mixed findings on the effects of eponymy, we take a contingency approach and theorize that firm age plays a key role in how the eponymy signal will be perceived by valuators. Employing a novel dataset of 471 acquired private firms, our analysis reveals that while the market value of eponymous firms declines early in the life cycle, past a threshold their value begins to increase. This suggests that at that point, eponymy becomes an asset and adds value to the firm. We establish this nadir at a firm age of 44.