The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs

Da Silva Rosa, R; Velayuthen, G; Walter, TS

The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs

Da Silva Rosa, R Velayuthen, G Walter, TS

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Publisher:: Elsevier
Publication Type:: Journal Article
Citation:: Pacific-Basin Finance Journal, 2003, 11 (2), pp. 197 - 218
Issue Date:: 2003-01

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Field	Value	Language
dc.contributor.author	Da Silva Rosa, R	en_US
dc.contributor.author	Velayuthen, G	en_US
dc.contributor.author	Walter, TS	en_US
dc.date.issued	2003-01	en_US
dc.identifier.citation	Pacific-Basin Finance Journal, 2003, 11 (2), pp. 197 - 218	en_US
dc.identifier.issn	0927-538X	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10213
dc.description.abstract	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 capital-backed 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.	en_US
dc.publisher	Elsevier	en_US
dc.relation.ispartof	Pacific-Basin Finance Journal	en_US
dc.subject.classification	Finance	en_US
dc.title	The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	11	en_US
utslib.for	150201 Finance	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access
pubs.consider-herdc	false	en_US
pubs.issue	2	en_US
pubs.volume	11	en_US

Abstract:

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 capital-backed 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.

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http://hdl.handle.net/10453/10213