Third-party certification and post-IPO acquisitions

Magnus Blomkvist, Karl Felixson and Anders Löflund

Applied Economics, 2020, vol. 52, issue 31, 3436-3447

Abstract: We explore the link between third-party certification (venture capital backing, analyst following and having a top underwriter), and post-IPO acquisition activity through the reduction in valuation uncertainty channel. In a sample of 2,424 U.S. IPOs, we find that third-party certification facilitates post-IPO acquisitions. The certified firms are both more likely and conduct acquisitions sooner after the IPO. Our results support the notion that third-party certification reduces post-IPO valuation uncertainty and thereby facilitates a more efficient acquisition strategy.

Date: 2020
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DOI: 10.1080/00036846.2020.1711509

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