Post-Ipo Operating Performance, Venture Capitalists and Market Timing
Essex Finance Centre Discussion Paper No. 04/16
41 Pages Posted: 26 Nov 2004
Date Written: November 2004
We analyse the post-issue operating performance of 304 venture-backed and 264 non-venture UK IPOs 1985-2000. IPOs exhibit a significant five-year, post-issue operational decline over the full sample period. However this is driven by a particularly poor performance by venture-backed and non-venture IPOs during the 1998-2000 bubble while underperformance by both is insignificant 1985-1997. Cross-section regression results indicate a significantly positive relationship between post-IPO operating performance and venture capitalist certification 1985-1997 and a negative relationship with initial returns 1998-2000. We conclude that the bubble period points to the influence of both market timing and investor sentiment on long run operating performance.
Keywords: Bubble, market timing, investor sentiment
JEL Classification: D92, G24
Suggested Citation: Suggested Citation