The Underpricing of Venture Capital Backed IPOs in China

Luxia Wang, Terence Tai Leung Chong, Yiyao He and Yuchen Liu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper measures the influence of venture capital (VC) on IPO valuations in China. It is found that the authentication effect is dominated by the grandstanding effect, suggesting that VC firms in China greatly value their reputations. It is also shown that the market-specific characteristics of non-VC-backed firms are more closely related to their initial returns, compared to those of VC-backed firms. In addition, corporate fundamentals play a more important role in the valuation for VC-backed firms than for non-VC-backed firms.

Keywords: Venture Capital; IPO; Price Volatility. (search for similar items in EconPapers)
JEL-codes: G24 (search for similar items in EconPapers)
Date: 2018-02-12
New Economics Papers: this item is included in nep-cfn, nep-cna and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:92079

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