 Do venture capitalists reduce underpricing and underperformance of IPOs?Yacine Belghitar () and Rob Dixon Applied Financial Economics, 2012, vol. 22, issue 1, pages 33-44 Abstract: The purpose of this article is to assess the effect of venture capitalists at Initial Public Offerings (IPOs). In so doing, a sample of Venture Capital (VC)-backed firms was compared with a sample of non-VC-backed firms. Consistent with the prevailing belief that venture capitalists reduce uncertainty at the offering, VC-backed IPOs are found to be less underpriced than non-VC-backed IPOs. Moreover, in multivariate analyses, venture capitalists affect negatively the degree of underpricing. Unlike previous studies, we control for the new listing and rebalancing biases in the analysis of the long term performance by comparing the IPO returns to carefully constructed size matched portfolios. Based on the calendar time and the event time approaches, the results show that both samples are underperforming the carefully constructed reference portfolios in the long term. The analysis also shows that the VC-backed IPOs do not outperform the non-VC-backed IPOs. The overall difference between both sets of IPOs is also not statistically significant. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:taf:apfiec:v:22:y:2012:i:1:p:33-44 Ordering information: This journal article can be ordered from Access Statistics for this article Applied Financial Economics is edited by Mark P. Taylor More articles in Applied Financial Economics from Taylor and Francis Journals |
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