Underpricing of venture-backed and non venture-backed IPOs: Germany's Neuer Markt
AbstractThis paper analyzes a comprehensive data set of 160 non venture-backed, 79 venture-backed and 61 bridge financed companies going public at Germany's Neuer Markt between March 1997 and March 2002. 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 analysis provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VC-backed IPOs. --
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Bibliographic InfoPaper provided by Center for Financial Studies (CFS) in its series CFS Working Paper Series with number 2001/01.
Date of creation: 2003
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Venture Capital; Underwriter; Initial Public Offering; Underpricing; Neuer Markt;
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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- Christian Hopp & Finn Rieder, 2005. "Strukturanalyse des deutschen Marktes für Beteiligungskapital: Unterschiede im Investitionsverhalten unabhängiger, bankenassoziierter und öffentlicher Venture-Capital-Investoren und Auswirkungen au," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 74(4), pages 140-152.
- Maunula, Mari, 2006. "The Perceived Value-added of Venture Capital Investors. Evidence from Finnish Biotechnology Industry," Discussion Papers 1030, The Research Institute of the Finnish Economy.
- Elston, Julie Ann & Yang, J. Jimmy, 2010. "Venture capital, ownership structure, accounting standards and IPO underpricing: Evidence from Germany," Journal of Economics and Business, Elsevier, vol. 62(6), pages 517-536, November.
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