Return on Recent VC Investment and Long–Run IPO Returns

Jean–Sébastien Michel

Entrepreneurship Theory and Practice, 2014, vol. 38, issue 3, 527-549

Abstract: This paper examines the return on recent venture capital (VC) investment and its impact on the long–run stock market performance of initial public offerings (IPOs). Firms with higher return on recent VC investment underperform firms with lower return on recent VC investment by 32 to 43% in the 3–year period following the offer. This effect is robust to various risk–adjustment procedures. Market conditions at the time of the VC valuation and changes in these market conditions thereafter are the main drivers of this result, suggesting that investors are too optimistic or do not properly understand the informational content of the recent return on VC investment.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1111/etap.12005 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:38:y:2014:i:3:p:527-549

DOI: 10.1111/etap.12005

Access Statistics for this article

More articles in Entrepreneurship Theory and Practice
Bibliographic data for series maintained by SAGE Publications ().