IPO's: The Impact of Venture Capital Links?

26 Pages Posted: 30 Aug 2010

See all articles by Craig D. Mellare

Craig D. Mellare

The University of Sydney; Financial Research Network (FIRN)

Date Written: March 31, 2010

Abstract

This paper examines the effects of venture capital (VC) backing on the performance of listed companies on the Australian securities market. We examine measures of the IPO pricing, operational performance after the IPO and market performance after the IPO for a matched sample of VC and non VC-backed IPOs between 1999 and 2005. We find evidence consistent with the certification/monitoring model that VC-backed companies are able to go public more quickly and at higher valuations than non VC-backed companies. The evidence on post IPO performance was mixed with some support for the certification/monitoring model and the adverse selection/grandstanding model. However, after partitioning the sample into old and young VC firms we find clearer evidence of the certification/monitoring role performed by older VC firms whereas younger VC firms show evidence of adverse selection/grandstanding effects.

Keywords: venture capital, private equity, IPO, Australia

JEL Classification: G12, G24

Suggested Citation

Mellare, Craig D., IPO's: The Impact of Venture Capital Links? (March 31, 2010). 23rd Australasian Finance and Banking Conference 2010 Paper. Available at SSRN: https://ssrn.com/abstract=1663430 or http://dx.doi.org/10.2139/ssrn.1663430

Craig D. Mellare (Contact Author)

The University of Sydney ( email )

University of Sydney
Sydney, NC NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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