Underpricing of venture backed IPOs: a meta-analysis approach

Listing firms are subject to underpricing mainly because of asymmetries of information, but IPOs backed by a venture capitalist are generally found to be subject to less underpricing. Although this condition is commonly verified by the empirical evidence, a consistent number of studies finds contras...

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Bibliographic Details
Published inEconomics of innovation and new technology Vol. 29; no. 4; pp. 331 - 348
Main Authors Tanda, Alessandra, Manzi, Giancarlo
Format Journal Article
LanguageEnglish
Published Abingdon Routledge 18.05.2020
Taylor & Francis Ltd
Subjects
Empirical analysis
Initial public offerings
IPO
Markets
Meta-analysis
meta-regression
Regression analysis
underpricing
Venture capital
United States > US
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Summary:Listing firms are subject to underpricing mainly because of asymmetries of information, but IPOs backed by a venture capitalist are generally found to be subject to less underpricing. Although this condition is commonly verified by the empirical evidence, a consistent number of studies finds contrasting results. This paper aims to answer to the question: do venture capitalists effectively reduce underpricing at IPO? Evidence provides a negative answer, with venture-backed IPOs having higher underpricing especially in US markets. Meta-regression results confirm the different effect of VC between US and European IPOs. Results overall suggest that other explanations on underpricing might hold in US markets.
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ISSN:1043-8599
1476-8364
DOI:10.1080/10438599.2019.1625154