Exit uncertainty and investment strategies of Venture capitalists: evidence from an IPO suspension in China

Shuxiao Sun, Lanying Peng, Zehao Wang, Wentao Li and Zhen Wang

Applied Economics Letters, 2024, vol. 31, issue 19, 1931-1938

Abstract: Our study examines whether Venture capitalists (VCs) prefer independent or syndicated investments when faced with exit uncertainty. By exploiting an initial public offering (IPO) suspension in China, our analysis reveals that VCs are more likely to independently invest in start-ups during such a suspension, which is driven by the screening and monitoring roles of VCs. Specifically, we find a greater likelihood of VC exits and a higher return on investment for VCs investing in start-ups during the suspension. Further, start-ups that obtain financing from VCs during the suspension are strictly monitored by VCs and reduce the extent of upward earnings management in the pre-IPO year.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2023.2208828 (text/html)
Access to full text is restricted to subscribers.

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:taf:apeclt:v:31:y:2024:i:19:p:1931-1938

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2023.2208828

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().