The Performance of Venture-Backed IPOs in Germany: Exit Strategies, Lock-up Periods, and Bank Ownership

44 Pages Posted: 12 Jun 2004  

Wolfgang Bessler

Justus-Liebig-University Giessen

Andreas Kurth

University of Giessen - Center for Finance and Banking

Date Written: September 2004

Abstract

The agency problems for initial public offerings are well documented in the literature. The objective of this research is to investigate the potential conflicts of interest for the Neuer Markt in Germany. Of special interest are venture-backed IPOs and those in which banks acted as venture capitalist, underwriter, and provided analyst recommendations. We observe high initial returns and out-performance over the first 6 months of trading which decreases significantly over the subsequent 18 months. The individual performance depends on the VC's underwriter and bank affiliation, exit behavior, and lock-up commitment. Venture capitalists and especially banks timed their exit well. This indicates some serious agency problems in the German IPO market.

JEL Classification: G14, G15, G24, G32

Suggested Citation

Bessler, Wolfgang and Kurth, Andreas, The Performance of Venture-Backed IPOs in Germany: Exit Strategies, Lock-up Periods, and Bank Ownership (September 2004). EFMA 2004 Basel Meetings Paper. Available at SSRN: https://ssrn.com/abstract=497122 or http://dx.doi.org/10.2139/ssrn.497122

Wolfgang Bessler (Contact Author)

Justus-Liebig-University Giessen ( email )

Center for Finance and Banking
Licher Strasse 74
Giessen, D-35394
Germany
49-641-9922460 (Phone)
49-641-9922469 (Fax)

HOME PAGE: http://wiwi.uni-giessen.de/home/Bessler/

Andreas Kurth

University of Giessen - Center for Finance and Banking ( email )

Licher Strasse 74
Pouring
Giessen, D-35394
Germany
(49) 641 99 22 466 (Phone)
(49) 641 99 22 469 (Fax)

HOME PAGE: http://wi.uni-giessen.de/gi/ma/dat/Bessler/Andreas_Kurth/

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