Venture Capital Backing, Investor Attention, and Initial Public Offerings

63 Pages Posted: 14 Oct 2016 Last revised: 4 Aug 2018

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Karthik Krishnan

Northeastern University

Qianqian Yu

Lehigh University

Date Written: July 30, 2018


We hypothesize that VC-backing garners greater “investor attention” (Merton (1987)) for IPOs, allowing IPO underwriters to perform two information-related roles more efficiently during the book-building and road-show process: information dissemination, where the lead underwriter disseminates noisy information about various aspects of the IPO firm to institutional investors; and information extraction, where the lead underwriter extracts information useful in pricing the IPO firm equity from institutional investors. Using pre-IPO media coverage as a proxy, we show empirically that VC-backed firm IPOs indeed obtain greater investor attention, causally yielding them more favorable IPO characteristics such as higher IPO and secondary market valuations.

Keywords: Initial Public Offerings, Investor Attention, Venture Capital

JEL Classification: G23, G24

Suggested Citation

Chemmanur, Thomas J. and Krishnan, Karthik and Yu, Qianqian, Venture Capital Backing, Investor Attention, and Initial Public Offerings (July 30, 2018). Available at SSRN: or

Thomas J. Chemmanur (Contact Author)

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

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Karthik Krishnan

Northeastern University ( email )

360 Huntington Avenue
414C Hayden Hall
Boston, MA 02115
United States
617-373-4707 (Phone)


Qianqian Yu

Lehigh University ( email )

621 Taylor Street
Bethlehem, PA 18015
United States

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