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The Underpricing of Venture Capital Backed IPOs in China

Author

Listed:
  • Wang, Luxia
  • Chong, Terence Tai Leung
  • He, Yiyao
  • Liu, Yuchen

Abstract

This paper measures the influence of venture capital (VC) on IPO valuations in China. It is found that the authentication effect is dominated by the grandstanding effect, suggesting that VC firms in China greatly value their reputations. It is also shown that the market-specific characteristics of non-VC-backed firms are more closely related to their initial returns, compared to those of VC-backed firms. In addition, corporate fundamentals play a more important role in the valuation for VC-backed firms than for non-VC-backed firms.

Suggested Citation

  • Wang, Luxia & Chong, Terence Tai Leung & He, Yiyao & Liu, Yuchen, 2018. "The Underpricing of Venture Capital Backed IPOs in China," MPRA Paper 92079, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:92079
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    References listed on IDEAS

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    More about this item

    Keywords

    Venture Capital; IPO; Price Volatility.;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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