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The Underpricing of Venture and Nonventure Capital IPOs: An Empirical Investigation

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  • Bill Francis
  • Iftekhar Hasan

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File URL: http://hdl.handle.net/10.1023/A:1011134715911
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Bibliographic Info

Article provided by Springer in its journal Journal of Financial Services Research.

Volume (Year): 19 (2001)
Issue (Month): 2 (April)
Pages: 99-113

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Handle: RePEc:kap:jfsres:v:19:y:2001:i:2:p:99-113

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Web page: http://www.springerlink.com/link.asp?id=102934

Related research

Keywords: IPOs; deliberate underpricing; venture-backed IPOs; stochastic frontier;

References

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  1. Barry, Christopher B. & Muscarella, Chris J. & Peavy, John III & Vetsuypens, Michael R., 1990. "The role of venture capital in the creation of public companies*1: Evidence from the going-public process," Journal of Financial Economics, Elsevier, Elsevier, vol. 27(2), pages 447-471, October.
  2. Tinic, Seha M, 1988. " Anatomy of Initial Public Offerings of Common Stock," Journal of Finance, American Finance Association, American Finance Association, vol. 43(4), pages 789-822, September.
  3. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, Elsevier, vol. 6(1), pages 21-37, July.
  4. Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, American Finance Association, vol. 46(1), pages 3-27, March.
  5. Loretta J. Mester, 1992. "Efficiency in the savings and loan industry," Working Papers 92-14, Federal Reserve Bank of Philadelphia.
  6. Allen, Franklin & Faulhaber, Gerald R., 1989. "Signalling by underpricing in the IPO market," Journal of Financial Economics, Elsevier, Elsevier, vol. 23(2), pages 303-323, August.
  7. Baron, David P, 1982. " A Model of the Demand for Investment Banking Advising and Distribution Services for New Issues," Journal of Finance, American Finance Association, American Finance Association, vol. 37(4), pages 955-76, September.
  8. Lerner, Joshua, 1994. "Venture capitalists and the decision to go public," Journal of Financial Economics, Elsevier, Elsevier, vol. 35(3), pages 293-316, June.
  9. Chemmanur, Thomas J, 1993. " The Pricing of Initial Public Offerings: A Dynamic Model with Information Production," Journal of Finance, American Finance Association, American Finance Association, vol. 48(1), pages 285-304, March.
  10. Dunbar, Craig G., 1995. "The use of warrants as underwriter compensation in initial public offerings," Journal of Financial Economics, Elsevier, Elsevier, vol. 38(1), pages 59-78, May.
  11. Hanley, Kathleen Weiss & Kumar, A. Arun & Seguin, Paul J., 1993. "Price stabilization in the market for new issues," Journal of Financial Economics, Elsevier, Elsevier, vol. 34(2), pages 177-197, October.
  12. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-47, February.
  13. Megginson, William L & Weiss, Kathleen A, 1991. " Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, American Finance Association, vol. 46(3), pages 879-903, July.
  14. Dunbar, Craig G., 1997. "Overallotment option restrictions and contract choice in initial public offerings," Journal of Corporate Finance, Elsevier, Elsevier, vol. 3(3), pages 251-275, June.
  15. Hunt-McCool, Janet & Koh, Samuel C & Francis, Bill B, 1996. "Testing for Deliberate Underpricing in the IPO Premarket: A Stochastic Frontier Approach," Review of Financial Studies, Society for Financial Studies, vol. 9(4), pages 1251-69.
  16. Ruud, Judith S., 1993. "Underwriter price support and the IPO underpricing puzzle," Journal of Financial Economics, Elsevier, Elsevier, vol. 34(2), pages 135-151, October.
  17. Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, Elsevier, vol. 15(1-2), pages 187-212.
  18. Mark Grinblatt & Chuan Yang Hwang, . "Signalling and the Pricing of Unseasoned New Issues," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 1-89, Wharton School Rodney L. White Center for Financial Research.
  19. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, Elsevier, vol. 19(2-3), pages 233-238, August.
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Citations

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Cited by:
  1. Silvia Rossetto, 2008. "The price of rapid exit in venture capital-backed IPOs," Annals of Finance, Springer, vol. 4(1), pages 29-53, January.
  2. Andrew C. Worthington & Jirapun Chorruk, 2009. "The Pricing and Performance of IPOs for Small-and-medium-sized Enterprises: Emerging Market Evidence," Discussion Papers in Finance finance:200912, Griffith University, Department of Accounting, Finance and Economics.
  3. Agathee, Ushad Subadar & Sannassee, Raja Vinesh & Brooks, Chris, 2012. "The underpricing of IPOs on the Stock Exchange of Mauritius," Research in International Business and Finance, Elsevier, Elsevier, vol. 26(2), pages 281-303.
  4. Luca Pennacchio, 2013. "The role of venture capital in Italian IPOs," Economics Bulletin, AccessEcon, vol. 33(4), pages 2528-2539.
  5. Yue-Cheong Chan & Congsheng Wu & Chuck Kwok, 2007. "Valuation of global IPOs: a stochastic frontier approach," Review of Quantitative Finance and Accounting, Springer, Springer, vol. 29(3), pages 267-284, October.
  6. Elisabete Félix & Cesaltina Pires & Mohamed Gulamhussen, 2013. "The Determinants of Venture Capital in Europe — Evidence Across Countries," Journal of Financial Services Research, Springer, Springer, vol. 44(3), pages 259-279, December.
  7. Chahine, Salim & Filatotchev, Igor, 2008. "The effects of venture capitalist affiliation to underwriters on short- and long-term performance in French IPOs," Global Finance Journal, Elsevier, vol. 18(3), pages 351-372.
  8. Goergen, M. & Khurshed, A. & Renneboog, L.D.R., 2006. "Why are the French so Different from the Germans? Underpricing of IPOs on the Euro New Markets," Discussion Paper, Tilburg University, Center for Economic Research 2006-24, Tilburg University, Center for Economic Research.
  9. Riccardo Ferretti & Antonio Meles, 2011. "Underpricing, wealth loss for pre-existing shareholders and the cost of going public: the role of private equity backing in Italian IPOs," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance), Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi" 11041, Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi".
  10. Bouis, Romain, 2003. "Optimistic Investors, IPOs Cycle and Real Investment," Economics Papers from University Paris Dauphine 123456789/3411, Paris Dauphine University.
  11. Rosenbusch, Nina & Brinckmann, Jan & Müller, Verena, 2013. "Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance," Journal of Business Venturing, Elsevier, vol. 28(3), pages 335-353.
  12. Pennacchio, Luca, 2013. "The causal effect of venture capital backing on the underpricing of Italian IPOs," MPRA Paper 48695, University Library of Munich, Germany.
  13. Achleitner, Ann-Kristin & Fingerle, Christian H., 2004. "What you get is what you need? The role of venture capitalists in managing growth of new ventures," CEFS Working Paper Series 2004-05, Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München.
  14. Bartling, Björn & Park, Andreas, 2009. "What determines the level of IPO gross spreads? Underwriter profits and the cost of going public," International Review of Economics & Finance, Elsevier, Elsevier, vol. 18(1), pages 81-109, January.
  15. Wolfgang Bessler & Andreas Kurth, 2007. "Agency Problems and the Performance of Venture-backed IPOs in Germany: Exit Strategies, Lock-up Periods, and Bank Ownership," The European Journal of Finance, Taylor & Francis Journals, vol. 13(1), pages 29-63.
  16. Cumming, D. & Johan, S.A., 2005. "Advice and monitoring in venture finance," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2005-003, Tilburg University, Tilburg Law and Economic Center.
  17. Garner, Jacqueline L. & Marshall, Beverly B., 2010. "The non-7% solution," Journal of Banking & Finance, Elsevier, vol. 34(7), pages 1664-1674, July.

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