TY - JOUR
T1 - The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs
AU - da Silva Rosa, Ray
AU - Velayuthen, Gerard
AU - Walter, Terry
PY - 2003/4
Y1 - 2003/4
N2 - We assess the initial underpricing and long-run share performance of venture capital (VC)-backed IPOs. We find, as expected, that estimates of underpricing are less severe using Habib and Ljungqvist [Economics Letters 61 (1998) 381] inspired measures that more accurately estimate the true wealth loss to the entrepreneur. However, we find no statistically significant difference in the underpricing of VC backed and non-VC backed IPOs. Further, unlike Lee et al. [Journal of Banking and Finance 20 (1996) 1189], we find that Australian IPOs do not underperform in the after-market. Non-VC capitalbacked and VC-backed firms earn normal returns in the 2 years following listing. Our results are inconsistent with the hypothesis that VC-backed IPOs are certified as high quality by mere virtue of being backed by venture capitalists.
AB - We assess the initial underpricing and long-run share performance of venture capital (VC)-backed IPOs. We find, as expected, that estimates of underpricing are less severe using Habib and Ljungqvist [Economics Letters 61 (1998) 381] inspired measures that more accurately estimate the true wealth loss to the entrepreneur. However, we find no statistically significant difference in the underpricing of VC backed and non-VC backed IPOs. Further, unlike Lee et al. [Journal of Banking and Finance 20 (1996) 1189], we find that Australian IPOs do not underperform in the after-market. Non-VC capitalbacked and VC-backed firms earn normal returns in the 2 years following listing. Our results are inconsistent with the hypothesis that VC-backed IPOs are certified as high quality by mere virtue of being backed by venture capitalists.
KW - IPO
KW - Long-run performance
KW - Underpricing
KW - Venture capital
UR - http://www.scopus.com/inward/record.url?scp=0037375022&partnerID=8YFLogxK
U2 - 10.1016/S0927-538X(02)00114-2
DO - 10.1016/S0927-538X(02)00114-2
M3 - Review article
AN - SCOPUS:0037375022
VL - 11
SP - 197
EP - 218
JO - Pacific-Basin Finance Journal
JF - Pacific-Basin Finance Journal
SN - 0927-538X
IS - 2
ER -