Abstract

http://ssrn.com/abstract=1339426
 
 

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Can VCs Time the Market? An Analysis of Exit Choice for Venture-Backed Firms


Eric R. Ball


Oracle Corporation; Claremont Graduate University Drucker-Ito School of Management

Hsin-Hui Chiu


California State University, Northridge

Richard L. Smith


University of California, Riverside - Anderson Graduate School of Management

April 4, 2011


Abstract:     
We use a sample of 8163 venture-backed companies over three decades to test the competing hypotheses that levels and relative shares of IPO and M&A exits are affected by market timing, versus pseudo market timing that reflects market conditions. We find evidence of pseudo market timing. VC-backed issuers react to market or sector run-ups but do not predict downturns. We find no evidence that firm-specific market timing contributes to IPO or M&A waves. We also find that acquirers turn to acquisition when other opportunities are unattractive, and that the market may be slow to recognize that such opportunities are declining.

Number of Pages in PDF File: 44

Keywords: IPO, acquisition, market timing, pseudo market timing, venture capital

JEL Classification: G14, G24, G32, G34

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Date posted: February 8, 2009 ; Last revised: April 12, 2011

Suggested Citation

Ball, Eric R. and Chiu, Hsin-Hui and Smith, Richard L., Can VCs Time the Market? An Analysis of Exit Choice for Venture-Backed Firms (April 4, 2011). Available at SSRN: http://ssrn.com/abstract=1339426 or http://dx.doi.org/10.2139/ssrn.1339426

Contact Information

Eric R. Ball
Oracle Corporation ( email )
500 Oracle Parkway
Redwood Shores, CA 94065
United States
650 506 2729 (Phone)
Claremont Graduate University Drucker-Ito School of Management ( email )
The Drucker School of Management
1021 North Dartmouth Avenue
Claremont, CA 91711
United States
Hsin-Hui Chiu
California State University, Northridge ( email )
18111 Nordoff Street
Northridge, CA 91330
United States
Richard L. Smith (Contact Author)
University of California, Riverside - Anderson Graduate School of Management ( email )
Riverside, CA 92521
United States
951-827-3554 (Phone)
HOME PAGE: http://www.agsm.ucr.edu/
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