Underpricing of venture backed IPOs: a meta-analysis approach

Alessandra Tanda and Giancarlo Manzi

Economics of Innovation and New Technology, 2020, vol. 29, issue 4, 331-348

Abstract: Listing firms are subject to underpricing mainly because of asymmetries of information, but IPOs backed by a venture capitalist are generally found to be subject to less underpricing. Although this condition is commonly verified by the empirical evidence, a consistent number of studies finds contrasting results. This paper aims to answer to the question: do venture capitalists effectively reduce underpricing at IPO? Evidence provides a negative answer, with venture-backed IPOs having higher underpricing especially in US markets. Meta-regression results confirm the different effect of VC between US and European IPOs. Results overall suggest that other explanations on underpricing might hold in US markets.

Date: 2020
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DOI: 10.1080/10438599.2019.1625154

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