The Role of Venture Capital in the Underpricing of European Life Science Companies
Journal of Economics and Management, 18
1 Pages Posted: 15 Jan 2015
Date Written: October 10, 2014
This study evaluates the underpricing of the European companies operating in the life science industries at IPO. Results show a positive and high underpricing for the IPOs occurred between 2002 and 2007. Moreover, when differentiating between VC backed and non VC backed firms, we find that the first exhibit a lower underpricing both for the first day of trading and the first week after the IPO, and evidence support the idea of a positive contribution of venture capitalists to the performance of the listing firms. Moreover, VC backed firms appear less risky, registering a lower volatility of returns in the days following the IPO date.
Keywords: venture capital, IPO, VC backed, life science companies, Europe
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