Are venture capitalists monitors or claptrap players in IPOs? New evidence from an emerging market

Xiaojie Ye, Dan Yang and Jiaqin Zhong

Finance Research Letters, 2025, vol. 71, issue C

Abstract: This study investigates the role of venture capitalists (VCs) in initial public offerings (IPOs) in the Chinese Sci-Tech Innovation Board, where VCs are highly concentrated. We find that VC-backed firms are likelier to succeed in IPOs; however, they exhibit greater IPO underpricing and perform poorly post-IPO. Findings support the grandstanding model. We identify that VC-backed firms do not receive fewer IPO inquiries, and the young-VC group has greater effects on IPO underpricing and post-IPO performance. Further, we explore the well-known A-share Main Board situation but obtain different results.

Keywords: Venture capitalists; IPO; Sci-tech innovation board; China (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014594

DOI: 10.1016/j.frl.2024.106430

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