Debt financing, venture capital, and the performance of initial public offerings
Christopher B. Barry and
Vassil T. Mihov
Journal of Banking & Finance, 2015, vol. 58, issue C, 144-165
We examine the roles of two financial intermediaries, lenders and venture capitalists, in a sample of more than 6000 IPO firms during 1980–2012. Venture capitalists and lenders generally fund different types of firms and, on average, are substitutes; however, in some instances we observe interactions and complementary roles between the two funding sources. Firms with high debt have lower valuation uncertainty, and lower initial day returns than those backed by venture capital. However, firms with high debt levels underperform in the long-run, especially those without venture capital. We provide some evidence that firms backed by reputable venture capitalists perform better.
Keywords: Debt financing; Venture capital; Initial public offerings; Long-run performance (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:58:y:2015:i:c:p:144-165
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