Venture Capital Funds and Post-IPO Performance in Booms and Busts: Evidence from Israeli IPO’s in the US in the 1990s1

Hedva Ber () and Yishay Yafeh ()
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Hedva Ber: Bank of Israel
Yishay Yafeh: The Hebrew University of Jerusalem and the University of Montreal

No 2003.12, Bank of Israel Working Papers from Bank of Israel

Abstract: This paper evaluates the ability of VC funds to identify and bring to market successful high-tech Israeli companies during the period 1991 to 2000. Using a newly constructed and highly detailed database we find that: (1) According to stock returns and other measures, the post-IPO performance of VC-backed companies did not differ from that of non-VC companies, throughout the 1990s. Furthermore, we show that the entire distributions of stock returns among VC-backed and other firms are identical. (2) The probability of survival until the IPO stage was higher for VC-backed companies. We interpret this as evidence that an important contribution of VC funds may be in increasing the survival rates of young technology-intensive firms, rather than in identifying high performers.

Keywords: Venture capital; IPO; survival rate; long run underperformance (search for similar items in EconPapers)
JEL-codes: G20 G30 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2003-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2003.12.pdf First version, 2003 (application/pdf)

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