Performance of Newly Listed Firms: Evidence from Japanese firm and venture capital data
This paper investigates the effect of Initial Public Offerings (IPOs) on firm performance. To single out the economic effects on firm performance brought about by issuing IPOs, we employ propensity-score matching difference-in-differences estimation. Using a unique firm-level panel dataset that allows us to identify newly listed firms and those keeping unlisted status, we find that the former showed better performance than their never-listed counterparts prior to their IPO while the difference in performance partly diminished after the IPO. This implies that firms' distorted behavior originating from, for example, empire building motives prevents newly listed firms from performing. This result is mainly driven by the sample firms going public during a "hot market". Using the information on venture capital (VC) investment, we also find that the participation of VC in investments exacerbates such negative impacts of IPOs on firm performance. The adverse impact on firm performance is more sizable among IPO firms which are invested in by VC syndicates consisting of a smaller number of less heterogeneous VC, or not including foreign VC. These results suggest that the timing of going public and the composition of VC syndicates are related to the post-IPO performance of newly listed firms.
|Date of creation:||Mar 2013|
|Date of revision:|
|Contact details of provider:|| Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901|
Web page: http://www.rieti.go.jp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giot, Pierre & Schwienbacher, Armin, 2007.
"IPOs, trade sales and liquidations: Modelling venture capital exits using survival analysis,"
Journal of Banking & Finance,
Elsevier, vol. 31(3), pages 679-702, March.
- GIOT, Pierre & SCHWIENBACHER, Armin, 2005. "IPOs, trade sales and liquidations: modelling venture capital exits using survival analysis," CORE Discussion Papers 2005013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Pierre Giot & Armin Schwienbacher, 2003. "IPOs, Trade Sales and Liquidations: Modelling Venture Capital Exits Using Survival Analysis," Finance 0312006, EconWPA.
- Megginson, William L & Weiss, Kathleen A, 1991. " Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July.
- Paul Gompers & Josh Lerner, 2001. "The Venture Capital Revolution," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 145-168, Spring.
- Kyoji Fukao & Tomohiko Inui & Keiko Ito & YoungGak Kim & Tangjun Yuan, 2011. "An International Comparison of the TFP Levels and the Productivity Convergence of Japanese, Korean, Taiwanese, and Chinese Listed Firms (Extended Version)," Global COE Hi-Stat Discussion Paper Series gd10-168, Institute of Economic Research, Hitotsubashi University.
- Jeremy C. Stein, 1989. "Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 655-669.
- Cumming, Douglas & Fleming, Grant & Suchard, Jo-Ann, 2005. "Venture capitalist value-added activities, fundraising and drawdowns," Journal of Banking & Finance, Elsevier, vol. 29(2), pages 295-331, February.
- SANJEEV BHOJRAJ & PAUL HRIBAR & MARC PICCONI & JOHN McINNIS, 2009. "Making Sense of Cents: An Examination of Firms That Marginally Miss or Beat Analyst Forecasts," Journal of Finance, American Finance Association, vol. 64(5), pages 2361-2388, October.
- Kyoji Fukao & Tomohiko Inui & Keiko Ito & Young Gak Kim & Tangjun Yuan, 2009.
"An International Comparison of the TFP Levels and the Productivity Convergence of Japanese, Korean, Taiwanese and Chinese Listed Firms,"
Global COE Hi-Stat Discussion Paper Series
gd09-089, Institute of Economic Research, Hitotsubashi University.
- Kyoji Fukao & Tomohiko Inui & Keiko Ito & Young Gak Kim & Tangjun Yuan, 2011. "An international comparison of the TFP levels and the productivity convergence of Japanese, Korean, Taiwanese and Chinese listed firms," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 9(2), pages 127-150.
- Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
- Kutsuna, Kenji & Okamura, Hideo & Cowling, Marc, 2002. "Ownership structure pre- and post-IPOs and the operating performance of JASDAQ companies," Pacific-Basin Finance Journal, Elsevier, vol. 10(2), pages 163-181, April.
- Ritter, Jay R, 1984. "The "Hot Issue" Market of 1980," The Journal of Business, University of Chicago Press, vol. 57(2), pages 215-40, April.
- Tykvova, Tereza & Walz, Uwe, 2007. "How important is participation of different venture capitalists in German IPOs?," Global Finance Journal, Elsevier, vol. 17(3), pages 350-378, 03.
- Thomas Hellmann & Laura Lindsey & Manju Puri, 2008.
"Building Relationships Early: Banks in Venture Capital,"
Review of Financial Studies,
Society for Financial Studies, vol. 21(2), pages 513-541, April.
- Thomas Hellman & Laura Lindsey & Manju Puri, 2004. "Building Relationships Early: Banks in Venture Capital," NBER Working Papers 10535, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Sendhil Mullainathan, 2003.
"Enjoying the Quiet Life? Corporate Governance and Managerial Preferences,"
Journal of Political Economy,
University of Chicago Press, vol. 111(5), pages 1043-1075, October.
- Bertrand, Marianne & Mullainathan, Sendhil, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Scholarly Articles 3429713, Harvard University Department of Economics.
- Gompers, Paul A., 1996. "Grandstanding in the venture capital industry," Journal of Financial Economics, Elsevier, vol. 42(1), pages 133-156, September.
- Brav, Alon & Gompers, Paul A, 1997. " Myth or Reality? The Long-Run Underperformance of Initial Public Offerings: Evidence from Venture and Nonventure Capital-Backed Companies," Journal of Finance, American Finance Association, vol. 52(5), pages 1791-1821, December.
- Stulz, ReneM., 1990. "Managerial discretion and optimal financing policies," Journal of Financial Economics, Elsevier, vol. 26(1), pages 3-27, July.
- John Asker & Joan Farre-Mensa & Alexander Ljungqvist, 2011. "Comparing the Investment Behavior of Public and Private Firms," NBER Working Papers 17394, National Bureau of Economic Research, Inc.
- Lee, Peggy M. & Wahal, Sunil, 2004. "Grandstanding, certification and the underpricing of venture capital backed IPOs," Journal of Financial Economics, Elsevier, vol. 73(2), pages 375-407, August.
- Omer Brav, 2009. "Access to Capital, Capital Structure, and the Funding of the Firm," Journal of Finance, American Finance Association, vol. 64(1), pages 263-308, 02.
- Mike Wright & Andy Lockett, 2003. "The Structure and Management of Alliances: Syndication in the Venture Capital Industry," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2073-2102, December.
- Joshua Lerner, 1994. "The Syndication of Venture Capital Investments," Financial Management, Financial Management Association, vol. 23(3), Fall.
- da Silva Rosa, Ray & Velayuthen, Gerard & Walter, Terry, 2003. "The sharemarket performance of Australian venture capital-backed and non-venture capital-backed IPOs," Pacific-Basin Finance Journal, Elsevier, vol. 11(2), pages 197-218, April.
- Florin, Juan, 2005. "Is venture capital worth it? Effects on firm performance and founder returns," Journal of Business Venturing, Elsevier, vol. 20(1), pages 113-135, January.
- James A. Brander & Raphael Amit & Werner Antweiler, 2002. "Venture-Capital Syndication: Improved Venture Selection vs. The Value-Added Hypothesis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 423-452, 09.
- Chang, Sea Jin, 2004. "Venture capital financing, strategic alliances, and the initial public offerings of Internet startups," Journal of Business Venturing, Elsevier, vol. 19(5), pages 721-741, September.
- Malcolm Baker & Jeffrey Wurgler, 1999.
"The Equity Share in New Issues and Aggregate Stock Returns,"
Yale School of Management Working Papers
ysm124, Yale School of Management, revised 01 Jan 2009.
- Malcolm Baker & Jeffrey Wurgler, 2000. "The Equity Share in New Issues and Aggregate Stock Returns," Journal of Finance, American Finance Association, vol. 55(5), pages 2219-2257, October.
- Kenji Kutsuna & Marc Cowling & Paul Westhead, 2000. "The short-run performance of JASDAQ companies and venture capital involvement before and after flotation," Venture Capital, Taylor & Francis Journals, vol. 2(1), pages 1-25, January.
- Wang, Clement K. & Wang, Kangmao & Lu, Qing, 2003. "Effects of venture capitalists' participation in listed companies," Journal of Banking & Finance, Elsevier, vol. 27(10), pages 2015-2034, October.
- Yael V. Hochberg & Alexander Ljungqvist & Yang Lu, 2007. "Whom You Know Matters: Venture Capital Networks and Investment Performance," Journal of Finance, American Finance Association, vol. 62(1), pages 251-301, 02.
- Arthurs, Jonathan D. & Busenitz, Lowell W., 2006. "Dynamic capabilities and venture performance: The effects of venture capitalists," Journal of Business Venturing, Elsevier, vol. 21(2), pages 195-215, March.
When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:13019. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko)
If references are entirely missing, you can add them using this form.