Underpricing of Venture-Backed and Non Venture-Backed IPOs: Germany’s Neuer Markt

نویسنده

  • Stefanie A. Franzke
چکیده

This paper analyzes a comprehensive data set of 108 non venture-backed, 58 venture-backed and 33 bridge financed companies going public at Germany’s Neuer Markt between March 1997 and March 2000. I examine whether these three types of issues differ with regard to issuer characteristics, balance sheet data or offering characteristics. Moreover, this empirical study contributes to the underpricing literature by focusing on the complementary or rather competing role of venture capitalists and underwriters in certifying the quality of a company when going public. Companies backed by a prestigious venture capitalist and/or underwritten by a top bank are expected to show less underpricing at the initial public offering (IPO) due to a reduced ex-ante uncertainty. This study provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VCbacked IPOs.

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Underpricing of Venture and Non Venture Capital IPOs: An Empirical Investigation

In this paper we examine the premarket underpricing phenomenon within a group of venture-backed and a group of non venture-backed initial public offerings (IPOs) using a stochastic frontier approach. Consistent with previous research, we find that venture-backed IPOs are managed by more reputable underwriters and are generally associated with less underwriter compensation. However, unlike other...

متن کامل

Who Are the True Venture Capitalists in Germany?

In this paper, we analyze the investment and divestment patterns of different types of venture capitalists. Using a data set embracing all venture-backed IPOs that occurred on Germany’s Neuer Markt we investigate whether the governance structures, objectives, abilities and track records of different types of venture capitalists have a decisive influence on their behavior. Our main finding is th...

متن کامل

Venture Capital and Underpricing: Capacity Constraints and Early Sales

We present a new theory about underpricing and Venture Capital-backed (VC-backed) companies where the key feature is capacity constraints Venture Capital firms can take only a limited number of new projects. This model can match the evidence gathered by the empirical literature on the grandstanding hypothesis, i.e., that younger Venture Capitalists rush to Initial Public Offers (IPOs). Moreover...

متن کامل

The Expiration of Mandatory and Voluntary IPO Lock-up Provisions - Empirical Evidence from Germany’s Neuer Markt

Abstract. This chapter explores the stock price impact of expirations of lock-up provisions that prevent insiders from selling their shares after the Initial Public Offering (IPO). I examine 172 lock-up expirations of 142 IPOs floated on Germany’s Neuer Markt. I detect significant negative abnormal returns and a twenty-five percent increase in trading volume surrounding lock-up expiration. The ...

متن کامل

What Determines the Level of IPO Gross Spreads? Underwriter Profits and the Cost of Going Public

This paper proposes an integrated framework to address three empirical findings of the literature on initial public offerings. (i) Why do investment banks earn positive profits in a competitive market? (ii) Why do banks receive lower gross spreads in venture capitalist (VC) backed IPOs? (iii) Why is underpricing more pronounced in VC than in non-VC backed IPOs? We model the IPO procedure as a t...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

عنوان ژورنال:

دوره   شماره 

صفحات  -

تاریخ انتشار 2001