Buchner, A, Mohamed, A and Wagner, N (2019) Are venture capital and buyout backed IPOs any different? Journal of International Financial Markets, Institutions and Money, 60. pp. 39-49. ISSN 1042-4431
Abstract
This paper addresses differences in the long and short run performance of Initial Public Offerings (IPOs) that are either backed by venture capital or by buyout sponsors. We investigate both the operating and the stock market performance of a sample of 851 U.S. IPOs during 2000 to 2014. Our results reveal significant short and long run performance differences. IPOs backed by venture capital sponsors are significantly more underpriced in the short run. We suggest that this is due to higher levels of information asymmetry. In the long run, return on assets as well as operating margins suggest that buyout backed IPOs outperform those backed by venture capital. However, we do not find significant differences in the risk-adjusted market performance using the Fama-French model. This suggests that buyout backed companies’ post listing operating performance improvements are well contained in the initial listing prices. Our results are not driven by selection effects, i.e. they are not due to the fact that buyout funds select different portfolio companies as compared to venture capital funds.
Metadata
Item Type: | Article |
---|---|
Authors/Creators: |
|
Copyright, Publisher and Additional Information: | © 2018 Elsevier B.V. This is an author produced version of a paper published in the Journal of International Financial Markets, Institutions and Money. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Private equity; Buyout; Venture capital; Initial Public Offereings |
Dates: |
|
Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 20 Jun 2019 13:16 |
Last Modified: | 20 Dec 2019 01:39 |
Status: | Published |
Publisher: | Elsevier BV |
Identification Number: | 10.1016/j.intfin.2018.12.002 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:147563 |