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Do Underwriters Collaborate With Venture Capitalists In Ipos Implications And Evidence
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Book Synopsis Do Underwriters Collaborate with Venture Capitalists in Ipos? Implications and Evidence by : Gerard Hoberg
Download or read book Do Underwriters Collaborate with Venture Capitalists in Ipos? Implications and Evidence written by Gerard Hoberg and published by . This book was released on 2009 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We test for potential collaboration between underwriters, venture capitalists, and other major owner managers in initial public offerings (IPOs). We find that VCs who are more loyal and tolerate higher underpricing receive long-term marketing support and favorable analyst revisions, allowing them to exit at high prices. Cooperating underwriters receive repeat business and more profits from allocating underpriced shares. The end of this extended support coincides with heavy insider selling and significantly negative abnormal returns. VCs enforce cooperation by switching lead underwriters when favors are not returned. Our collaboration hypothesis resolves some previously surprising findings regarding underpricing, long-term underperformance, insider trading patterns, and analyst research.
Book Synopsis The Role of Venture Capitalists and Underwriters in the Underpricing of Initial Public Offerings by : Youssef Hussein Yaacoub
Download or read book The Role of Venture Capitalists and Underwriters in the Underpricing of Initial Public Offerings written by Youssef Hussein Yaacoub and published by . This book was released on 2010 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the phenomenon of underpricing at the IPO Date. The focus is on the collaboration theory which states that the underwriter and the venture capitalist enter into a deal that ensures the mutual benefit for both parties. The collaboration between the two parties is strengthened over time. Underwriters would be permitted to benefit from underpricing the IPO issue in return for providing support to venture capitalists allowing them to exit at a high price. Venture capitalists are expected to increase their ownership in the firm just prior the IPO date in order to benefit from this collaboration. In this paper, I will provide support for the collaboration theory using a dataset of US firms that went public between 1996 and 2005. Furthermore, I will investigate whether certain modes of ownership increase at the IPO are particularly associated with underpricing.
Book Synopsis Handbook of Research on IPOs by : Mario Levis
Download or read book Handbook of Research on IPOs written by Mario Levis and published by Edward Elgar Publishing. This book was released on 2013-11-29 with total page 599 pages. Available in PDF, EPUB and Kindle. Book excerpt: The chapters offer some important new insights into issues that will be of interest not only to the academic community but also to professionals involved in the preparation, structure and execution of such transactions, market regulators, and private a
Book Synopsis Research Handbook on Executive Pay by : John S. Beasley
Download or read book Research Handbook on Executive Pay written by John S. Beasley and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 553 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay. The authors analyze the two dominant theoretical approaches – managerial power theory and optimal contracting theory – and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed. A timely study of a controversial topic, the Handbook will be an essential resource for students, scholars and practitioners of law, finance, business and accounting.
Book Synopsis Underpricing of Ipos and the Certification Role of Venture Capitalists by : Tilo Kraus
Download or read book Underpricing of Ipos and the Certification Role of Venture Capitalists written by Tilo Kraus and published by . This book was released on 2002 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyses the underpricing of IPOs and the role of venture capitalists in solving the underpricing problem for a data set of 124 venture capital backed and 184 non-venture capital backed companies that went public on Germany's Neuer Markt between March 1997 and May 2001. The slightly mitigated underpricing of venture capital backed IPOs becomes insignificant after controlling for ex-ante uncertainty and underwriter reputation with an interactive dummy variable approach. The two groups of companies do not differ either with respect to their risk characteristics or with respect to the reputation of the underwriter. However, venture capital backed companies that are underwritten by top banks seem to be underpriced more than their non-Venture Capital backed counterparts. Similarly, the impact of a similar level of ex-ante uncertainty on underpricing appears to be much weaker for venture capital backed IPOs. Therefore, this study provides evidence for different investor-perceptions of venture capital backed companies and supports a competitive rather than complementary interaction of venture capitalists and underwriters.
Book Synopsis Handbook of the Economics of Finance SET:Volumes 2A & 2B by : George M. Constantinides
Download or read book Handbook of the Economics of Finance SET:Volumes 2A & 2B written by George M. Constantinides and published by Newnes. This book was released on 2013-01-21 with total page 1732 pages. Available in PDF, EPUB and Kindle. Book excerpt: This two-volume set of 23 articles authoritatively describes recent scholarship in corporate finance and asset pricing. Volume 1 concentrates on corporate finance, encompassing topics such as financial innovation and securitization, dynamic security design, and family firms. Volume 2 focuses on asset pricing with articles on market liquidity, credit derivatives, and asset pricing theory, among others. Both volumes present scholarship about the 2008 financial crisis in contexts that highlight both continuity and divergence in research. For those who seek insightful perspectives and important details, they demonstrate how corporate finance studies have interpreted recent events and incorporated their lessons. Covers core and newly-developing fields Explains how the 2008 financial crises affected theoretical and empirical research Exposes readers to a wide range of subjects described and analyzed by the best scholars
Book Synopsis Institutional Affiliation and the Role of Venture Capital by : Yasushi Hamao
Download or read book Institutional Affiliation and the Role of Venture Capital written by Yasushi Hamao and published by . This book was released on 1998 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The presence of venture capital in the ownership structure of U.S. firms going public has been associated with both improved long-term performance and lower underpricing at the time of the IPOs. In Japan, we find the long-run performance of venture capital-backed IPOs to be no better than that of other IPOs, with the exception of firms backed by foreign owned or independent venture capitalists. Many of the major venture capital firms in Japan are subsidiaries of securities firms that may face a conflict of interest when underwriting the venture capital-backed issue. When venture capital holdings are broken down by their institutional affiliation, we find that firms with venture backing from securities company subsidiaries do not perform significantly worse over a three-year time horizon than other IPOs. On the other hand, we find that IPOs in which the lead venture capitalist is also the lead underwriter have higher initial returns than other venture capital-backed IPOs. The latter result suggests that conflicts of interest influence the initial pricing, but not the long-term performance, of initial public offerings in Japan"--Abstract
Author :Georg Rindermann Publisher :Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften ISBN 13 : Total Pages :226 pages Book Rating :4.F/5 ( download)
Book Synopsis Venture Capitalist Participation and the Performance of IPO Firms by : Georg Rindermann
Download or read book Venture Capitalist Participation and the Performance of IPO Firms written by Georg Rindermann and published by Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften. This book was released on 2004 with total page 226 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates whether venture capitalists in Europe have a positive impact on the operating and long-run market performance of firms they bring public. To examine this issue a hand-collected international data set of venture- and non venture-backed IPOs at the French Nouveau Marché, German Neuer Markt, and British techMARK dating from 1996 to 1999 is used. The findings suggest that there are substantial variations in the experience and sophistication of venture capitalists. Moreover, venture-backed IPOs do not generally outperform non venture-backed issues, irrespective of the applied performance measure. Instead, merely the more experienced international venture capitalists appear to have positive effects on both the operating and market performance of portfolio firms. The overall results are interpreted as evidence for the heterogeneity of venture capitalists operating in the European market.
Book Synopsis Performance of Financial Institutions by : Patrick T. Harker
Download or read book Performance of Financial Institutions written by Patrick T. Harker and published by Cambridge University Press. This book was released on 2000-05-18 with total page 516 pages. Available in PDF, EPUB and Kindle. Book excerpt: The efficient operation of financial intermediaries--banks, insurance and pension fund firms, government agencies and so on--is instrumental for the efficient functioning of the financial system and the fueling of the economies of the twenty-first century. But what drives the performance of these institutions in today's global environment? In this volume, world-renowned scholars bring their expertise to bear on the issues. Primary among them are the definition and measurement of efficiency of a financial institution, benchmarks of efficiency, identification of the drivers of performance and measurement of their effects on efficiency, the impact of financial innovation and information technologies on performance, the effects of process design, human resource management policies, as well as others.
Book Synopsis Sinners Or Saints? Top Underwriters, Venture Capitalists, and IPO Underpricing by : Kose John
Download or read book Sinners Or Saints? Top Underwriters, Venture Capitalists, and IPO Underpricing written by Kose John and published by . This book was released on 2018 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines strategic interactions between venture capitalists (VCs) and top underwriters in the IPO process. We test two contrasting hypotheses: certification and rent extraction. On the one hand, the joint involvement of VCs and top underwriters can amplify their certification effect, reducing IPO underpricing. On the other hand, the rent extraction incentives of VCs and top underwriters, particularly in a repeated dealing context, can increase underpricing. We test these contrasting effects on IPO underpricing in the cross-section and around two regulatory shocks. First, VC-backed IPOs, VC-backed deals with top underwriters, and deals with stronger VC-underwriter ties exhibit greater underpricing. The cross-sectional results continue to hold in two-stage least squares estimation with geographical instruments. Second, the 2012 JOBS Act decreased disclosures by issuers and increased informational asymmetry. We find that IPO underpricing increased among VC-backed IPOs involving top underwriters after the JOBS Act. Third, a 2003 NASD rule limited explicit rents that may be extracted from preferential allocations of new IPO issues. We find that VC-backed IPO underpricing declined after the shock, and the effect was concentrated among VC-backed deals involving top underwriters and VCs with ties to underwriters. Importantly, we find no effect of top underwriters alone unless a VC is also involved. The observed decline in IPO underpricing cannot be explained by analyst involvement or the passage of Regulation FD. Moreover, repeat dealing between large institutions and underwriters similarly increases underpricing, but the effect does not explain the role of VC-underwriter ties and does not decline after the 2003 shock. Overall, our results support rent extraction, shed new light on the effects of VC backing, underwriters, and institutions on IPO underpricing, and emphasize the role of strategic interactions between them in the post-dot-com period.
Download or read book IPO Underpricing written by Marvin Lüers and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The IPO underpricing is a well-documented phenomenon in financial economics. In this paper 712 IPOs in the U.S. are analyzed during the period 1995 to 2016. The average underpricing of 34.3 percent for the sample is largely driven by the Dot-com bubble years. The focus of the analysis is on the relation of underpricing to reputation of investment banks and venture capitalists. Testing different reputation measures, the conclusion can drawn that the Carter-Manaster rank of the lead-left underwriter and the age of the venture capitalist with the highest cumulative investment are significant explanatory variables in a multivariate regression model. The empirical evidence shows that reputation is a driver of underpricing, however, with declining magnitude. Also, the data (partially) confirms the "grandstanding" hypothesis and shows that underpricing is related to certain momentum effects in the 180-day period post-IPO.
Book Synopsis Three Essays on Initial Public Offerings and Market Information by : William C. Johnson
Download or read book Three Essays on Initial Public Offerings and Market Information written by William C. Johnson and published by . This book was released on 2006 with total page 322 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Venture Capital Investments by IPO Underwriters by : Li, Xi
Download or read book Venture Capital Investments by IPO Underwriters written by Li, Xi and published by . This book was released on 2006 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study IPO pricing when underwriters are venture capital investors in issuers and test three hypotheses concerning the effects of underwriter share ownership on the IPO underwriting and pricing processes. We find that venture investments by underwriters significantly reduce IPO underpricing; and the result is stronger for lead underwriters. This evidence is consistent with both underwriter certification and improved underwriter alignment of interests with issuers. The fall in underpricing is substantially greater when there is greater uncertainty about IPO valuation, which further supports the underwriter certification effect. Controlling for endogeneity effects does not change our conclusions. Finally, lead underwriter venture investment in IPO issuers also reduces underwriter gross spreads. Overall, the evidence is consistent with an underwriter certification effect and to a lesser degree an underwriter-issuer alignment of interest effect and inconsistent with an IPO conflict of interest effect.
Book Synopsis Initial Public Offerings by : Michelle Lowry
Download or read book Initial Public Offerings written by Michelle Lowry and published by . This book was released on 2017 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this monograph is to provide an overview of the IPO literature since 2000. The fewer numbers of companies going public in recent years has raised many questions regarding the IPO process, in both academic and regulatory circles. As we all strive to understand these changes in the market, it is especially important to understand the dynamics underlying the IPO process. If the process of going public is too costly or the IPO mechanism is plagued by too many conflicts of interest among the various intermediaries, then private companies may rationally choose other methods of raising capital. In a related vein, it is imperative that new regulations not be based on research focusing solely on large, more mature firms. Newly public firms have unique characteristics, and an increased understanding of such issues will contribute positively to well-functioning public markets and further growth of the entrepreneurial sector. We also provide a detailed guide to researchers on how to obtain a research-quality sample of IPOs, from standard data sources. Related to this, we tabulate important corrections to these standard data sources.
Book Synopsis Institutional Affiliation and the Role of Venture Capital by : Yasushi Hamao
Download or read book Institutional Affiliation and the Role of Venture Capital written by Yasushi Hamao and published by . This book was released on 2006 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The presence of venture capital in the ownership structure of U.S. firms going public has been associated with both improved long-term performance and lower underpricing at the time of the IPOs. In Japan, we find the long-run performance of venture capital-backed IPOs to be no better than that of other IPOs, with the exception of firms backed by foreign owned or independent venture capitalists. Many of the major venture capital firms in Japan are subsidiaries of securities firms that may face a conflict of interest when underwriting the venture capital-backed issue. When venture capital holdings are broken down by their institutional affiliation, we find that firms with venture backing from securities company subsidiaries do not perform significantly worse over a three-year time horizon than other IPOs. On the other hand, we find that IPOs in which the lead venture capitalist is also the lead underwriter have higher initial returns than other venture capital-backed IPOs. The latter result suggests that conflicts of interest influence the initial pricing, but not the long-term performance, of initial public offerings in Japan.
Book Synopsis Impact of Legal Institutions on IPO Survival by : Susanne Espenlaub
Download or read book Impact of Legal Institutions on IPO Survival written by Susanne Espenlaub and published by . This book was released on 2016 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Around the world, investors, practitioners, regulators and policy makers seek to understand whether, when and why recently listed stocks, initial public offerings (IPOs) are delisted rather than continue trading (survive). Using data on 7,627 IPOs issued during 2000-2008 across 32 countries, we explore the impact of the legal system on IPO survival. We find that IPOs in countries with better investor protections remain listed for longer. This suggests that better legal systems increase the net benefits companies derive from staying listed. We also provide evidence that better legal systems increase the effectiveness of IPO certification by venture capitalists, underwriters and auditors.
Book Synopsis The Venture Capital Cycle by : Paul Alan Gompers
Download or read book The Venture Capital Cycle written by Paul Alan Gompers and published by MIT Press. This book was released on 2004 with total page 592 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the venture capital process, from fund-raising through investing to exiting investments; a new edition with major revisions and six new chapters that reflect the latest research.
