How Important is Participation of Different VCs in German IPOs?

Posted: 1 Aug 2007

See all articles by Tereza Tykvova

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Leibniz Institute for Financial Research SAFE

Abstract

This paper sets out to analyze the influence of different types of VCs on the performance of their portfolio firms around and after IPO in Germany. Our main finding is that market participants did not correctly assess the role played by the different types of VCs. Firms backed by independent, international and reputable VCs outperform other IPOs, and their share prices fluctuate less than those of their counterparts. Thus, independent, international and reputable VCs were able to add value by achieving a lower post-IPO idiosyncratic risk and a higher return. In contrast, firms backed by public VCs showed relative underperformance.

Keywords: Venture Capital, Initial Public Offerings, Long-Run Performance, Underpricing, Heterogeneity

JEL Classification: G14, G24, G32

Suggested Citation

Tykvova, Tereza and Walz, Uwe, How Important is Participation of Different VCs in German IPOs?. Global Finance Journal, Vol. 17, pp. 350-378, 2007, Available at SSRN: https://ssrn.com/abstract=970487

Tereza Tykvova

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Germany

Uwe Walz (Contact Author)

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Center For Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Leibniz Institute for Financial Research SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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