We examine how the exit mode (i.e., initial public offering - IPO, trade sale, or write-off) of venture capital investments is influenced by additional exit opportunities brought by cross-border investors. We perform our analyses on a sample of 1,062 financing rounds in 462 high-tech start-ups in 7 European countries. Our findings indicate that, controlling for firm performance, investor characteristics, and local exit conditions, the probability of exiting via trade sale increases with the additional set of M&A opportunities brought by cross-border investors. A similar effect, but with weaker statistical significance, is detected for IPO exits. We reveal that cross-border investors may, at least partially, compensate for insufficient local exit possibilities. They can spillover the capital market activity of their home country and enhance exit options for young ventures. International syndicates are also quicker to write-off their non-performing investments. Hence, international syndication improves the proficiency of entrepreneurial finance relationships.
{"title":"Cross-Border Investments and Venture Capital Exits in Europe","authors":"F. Bertoni, Alexander Groh","doi":"10.2139/ssrn.2373051","DOIUrl":"https://doi.org/10.2139/ssrn.2373051","url":null,"abstract":"We examine how the exit mode (i.e., initial public offering - IPO, trade sale, or write-off) of venture capital investments is influenced by additional exit opportunities brought by cross-border investors. We perform our analyses on a sample of 1,062 financing rounds in 462 high-tech start-ups in 7 European countries. Our findings indicate that, controlling for firm performance, investor characteristics, and local exit conditions, the probability of exiting via trade sale increases with the additional set of M&A opportunities brought by cross-border investors. A similar effect, but with weaker statistical significance, is detected for IPO exits. We reveal that cross-border investors may, at least partially, compensate for insufficient local exit possibilities. They can spillover the capital market activity of their home country and enhance exit options for young ventures. International syndicates are also quicker to write-off their non-performing investments. Hence, international syndication improves the proficiency of entrepreneurial finance relationships.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"192 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124268998","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While existing research shows that a large number of IPOs are withdrawn from registration, little is known regarding the fates of those firms. This study documents capital market activities and corporate outcomes for 588 withdrawn IPOs between 1999 and 2004. We find that 13% of withdrawing issuers return for a successful IPO, 36% are able to raise capital privately and 42% either merge or are acquired with 11% filing for bankruptcy. While the implied valuation from post-withdrawal mergers/acquisitions and returning IPOs are similar to valuations implied in the initial withdrawn filing, implied valuations from private placements are significantly discounted. The ex-ante probabilities of post withdrawal outcomes and post withdrawal valuations are found to have significant effects on the choice to withdraw an IPO.
{"title":"Post IPO Withdrawal Outcomes","authors":"Kevin K. Boeh, Craig G. Dunbar","doi":"10.2139/ssrn.2135772","DOIUrl":"https://doi.org/10.2139/ssrn.2135772","url":null,"abstract":"While existing research shows that a large number of IPOs are withdrawn from registration, little is known regarding the fates of those firms. This study documents capital market activities and corporate outcomes for 588 withdrawn IPOs between 1999 and 2004. We find that 13% of withdrawing issuers return for a successful IPO, 36% are able to raise capital privately and 42% either merge or are acquired with 11% filing for bankruptcy. While the implied valuation from post-withdrawal mergers/acquisitions and returning IPOs are similar to valuations implied in the initial withdrawn filing, implied valuations from private placements are significantly discounted. The ex-ante probabilities of post withdrawal outcomes and post withdrawal valuations are found to have significant effects on the choice to withdraw an IPO.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117065313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jerry X. Cao, G. Tian, Vincent Tang, Xiaoming Wang
This paper examines the relationship between ownership structures and IPO long-run performance in China. Although entrepreneurial firms underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Entrepreneurial firms with one share one vote structure outperform those with ownership control wedge by 30% for 3 years post-IPO in either buy-and-hold or cumulative monthly returns. Entrepreneurial firms with excess ownership control wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that entrepreneurial firms need to improve corporate governance such as disproportional ownership structure to better safeguard the interest of long-run shareholders.
{"title":"Disproportional Ownership Structure and IPO Long-Run Performance of Entrepreneurial Firm in China","authors":"Jerry X. Cao, G. Tian, Vincent Tang, Xiaoming Wang","doi":"10.2139/ssrn.2369024","DOIUrl":"https://doi.org/10.2139/ssrn.2369024","url":null,"abstract":"This paper examines the relationship between ownership structures and IPO long-run performance in China. Although entrepreneurial firms underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Entrepreneurial firms with one share one vote structure outperform those with ownership control wedge by 30% for 3 years post-IPO in either buy-and-hold or cumulative monthly returns. Entrepreneurial firms with excess ownership control wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that entrepreneurial firms need to improve corporate governance such as disproportional ownership structure to better safeguard the interest of long-run shareholders.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131104131","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Extant research on developed markets shows that investor sentiment plays a prominent role in IPO markets. There is sparse work in the context of emerging markets. We fill this lacuna by studying the Indian IPO market. We examine the determinants of offer price band and its influence on offer price adjustment and subsequent listing performance. Offer price band is a crucial component of the book building process and has not been studied in the context of emerging markets. Our work fills this void. We hypothesise that retail demand which is a proxy for investor sentiment will positively influence offer price band. We also posit that the profitability of a firm will be inversely related to offer price band. Our empirical tests support these hypotheses. We also find that offer price adjustment is positively related to offer price band.
{"title":"Price Band, Offer Price Adjustment and Initial Listing Returns: Evidence from the Indian IPO Market","authors":"C. Krishnamurti, Domenico Pensiero","doi":"10.2139/ssrn.2382931","DOIUrl":"https://doi.org/10.2139/ssrn.2382931","url":null,"abstract":"Extant research on developed markets shows that investor sentiment plays a prominent role in IPO markets. There is sparse work in the context of emerging markets. We fill this lacuna by studying the Indian IPO market. We examine the determinants of offer price band and its influence on offer price adjustment and subsequent listing performance. Offer price band is a crucial component of the book building process and has not been studied in the context of emerging markets. Our work fills this void. We hypothesise that retail demand which is a proxy for investor sentiment will positively influence offer price band. We also posit that the profitability of a firm will be inversely related to offer price band. Our empirical tests support these hypotheses. We also find that offer price adjustment is positively related to offer price band.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128924208","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
K. Kutsuna, Janet Kiholm Smith, Richard L. Smith, Kazuo Yamada
We use the IPOs of supply-chain partners as precipitating events and test for positive spillovers on private firms (the “IPO spillover hypothesis”). A trading partner’s IPO may benefit its suppliers through increased demand and its customers by reducing an input-related growth constraint. A newly public firm may also transmit additional liquidity to trading partners through trade credit practices. Using Japanese data on important relationships between IPO firms and their private suppliers and customers, we find that suppliers and customers experience significantly higher rates of growth in revenue, cash balances, and PP&E than do other private firms. The paper appears to be the first to document real and financial effects of positive liquidity shocks on supply-chain partners.
{"title":"Supply-Chain Spillover Effects of IPOs","authors":"K. Kutsuna, Janet Kiholm Smith, Richard L. Smith, Kazuo Yamada","doi":"10.2139/ssrn.2223418","DOIUrl":"https://doi.org/10.2139/ssrn.2223418","url":null,"abstract":"We use the IPOs of supply-chain partners as precipitating events and test for positive spillovers on private firms (the “IPO spillover hypothesis”). A trading partner’s IPO may benefit its suppliers through increased demand and its customers by reducing an input-related growth constraint. A newly public firm may also transmit additional liquidity to trading partners through trade credit practices. Using Japanese data on important relationships between IPO firms and their private suppliers and customers, we find that suppliers and customers experience significantly higher rates of growth in revenue, cash balances, and PP&E than do other private firms. The paper appears to be the first to document real and financial effects of positive liquidity shocks on supply-chain partners.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131105172","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2013-09-05DOI: 10.4337/9781781955376.00011
Shantanu Banerjee, Ufuk Güçbilmez, G. Pawlina
This paper examines the cyclical nature of IPO activity in the UK. The results indicate a lead-lag relationship between IPO initial returns and volume. IPO volume is sensitive to recent changes in market conditions. There is evidence of industry concentration in hot markets, and fi rms raise more equity during these periods. Overall, IPO waves in the UK share similar characteristics with those in the US. The findings are consistent with rational explanations of IPO waves. However, explanations based on investor sentiment and market timing cannot be ruled out, since there is a strong positive relationship between IPO volume and the market's price-to-book ratio.
{"title":"IPO Waves and Hot Markets in the UK","authors":"Shantanu Banerjee, Ufuk Güçbilmez, G. Pawlina","doi":"10.4337/9781781955376.00011","DOIUrl":"https://doi.org/10.4337/9781781955376.00011","url":null,"abstract":"This paper examines the cyclical nature of IPO activity in the UK. The results indicate a lead-lag relationship between IPO initial returns and volume. IPO volume is sensitive to recent changes in market conditions. There is evidence of industry concentration in hot markets, and fi rms raise more equity during these periods. Overall, IPO waves in the UK share similar characteristics with those in the US. The findings are consistent with rational explanations of IPO waves. However, explanations based on investor sentiment and market timing cannot be ruled out, since there is a strong positive relationship between IPO volume and the market's price-to-book ratio.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"246 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115256876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
One important effect of the sluggish IPO market is the focus on deregulation and the emergence of a new generation of securities markets. These deregulated markets are considered important to stimulate entrepreneurial activity and attract venture capital. This paper argues that the introduction of these new markets and accompanying deregulatory measures exhibits a surprisingly low success rate.There are several reasons for this. First, founders of emerging growth companies increasingly believe that it is in their best interest to remain private as long as possible. Second, we show how the decline of IPOs has led venture capitalists and entrepreneurs to access other exit routes. Trade sales have become the preferred exit option for most investments in growth companies. Third, we observe that mature corporations show an increased interest in hiring or collaborating with venture capitalists (to improve the innovation outcomes of the mature corporations). Fourth, by using case illustrations from the corporate venture capital industry, we highlight the wide variety of new collaborative venture capital models (which will arguably pave the way to even more trade sales with higher exit values in the future).
{"title":"Venture Capital, IPOs and Corporate Innovation","authors":"J. McCahery, E. Vermeulen","doi":"10.2139/ssrn.2298315","DOIUrl":"https://doi.org/10.2139/ssrn.2298315","url":null,"abstract":"One important effect of the sluggish IPO market is the focus on deregulation and the emergence of a new generation of securities markets. These deregulated markets are considered important to stimulate entrepreneurial activity and attract venture capital. This paper argues that the introduction of these new markets and accompanying deregulatory measures exhibits a surprisingly low success rate.There are several reasons for this. First, founders of emerging growth companies increasingly believe that it is in their best interest to remain private as long as possible. Second, we show how the decline of IPOs has led venture capitalists and entrepreneurs to access other exit routes. Trade sales have become the preferred exit option for most investments in growth companies. Third, we observe that mature corporations show an increased interest in hiring or collaborating with venture capitalists (to improve the innovation outcomes of the mature corporations). Fourth, by using case illustrations from the corporate venture capital industry, we highlight the wide variety of new collaborative venture capital models (which will arguably pave the way to even more trade sales with higher exit values in the future).","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133505029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
One of the primary goals of a firm going public is to create a greater visibility to investors in general. Using a sample of 809 IPOs from 2001–2010, we empirically examine and find that multiple lead underwriters (MLUs) have greater visibility through our five pre- and post-IPO visibility measures. This also holds after accounting for potential endogeneity. Also, MLU-IPOs do not have more underpricing. Our results suggest that issuers with MLUs can increase the firm’s familiarity to the investment community and expand their investor base, and this increased firm visibility is not a trade-off for a greater level of underpricing.
{"title":"Multiple Lead Underwriter IPOs and Firm Visibility","authors":"Jin Q. Jeon, Cheolwoo Lee, Tareque Nasser, M. Via","doi":"10.2139/ssrn.2290781","DOIUrl":"https://doi.org/10.2139/ssrn.2290781","url":null,"abstract":"One of the primary goals of a firm going public is to create a greater visibility to investors in general. Using a sample of 809 IPOs from 2001–2010, we empirically examine and find that multiple lead underwriters (MLUs) have greater visibility through our five pre- and post-IPO visibility measures. This also holds after accounting for potential endogeneity. Also, MLU-IPOs do not have more underpricing. Our results suggest that issuers with MLUs can increase the firm’s familiarity to the investment community and expand their investor base, and this increased firm visibility is not a trade-off for a greater level of underpricing.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114472510","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Vincent J. Intintoli, Shrikant P. Jategaonkar, Kathleen M. Kahle
type="main"> Despite high levels of asymmetry of information, firms that issue seasoned equity offerings (SEOs) within a year of their initial public offering (IPO) (follow-on SEOs) are able to offer shares at a lower discount as compared to more mature firms. We provide evidence that this seeming contradiction can be explained by a very high degree of demand for the follow-on offering. We find that the likelihood of issuing a follow-on SEO is significantly related to the level of institutional demand and that discounts are lower for follow-on SEOs in which institutional demand is high. We also consider the joint effect of cash holdings and follow-on SEOs on discounts since firms that have recently gone public tend to hold high levels of cash. Underpricing is higher for firms with elevated preoffer levels of cash, which is consistent with market timing predictions. However, this relation is mitigated for both follow-on SEOs and issues that also have high share demand.
{"title":"The Effect of Demand for Shares on the Timing and Underpricing of Seasoned Equity Offers","authors":"Vincent J. Intintoli, Shrikant P. Jategaonkar, Kathleen M. Kahle","doi":"10.2139/ssrn.1915586","DOIUrl":"https://doi.org/10.2139/ssrn.1915586","url":null,"abstract":"type=\"main\"> Despite high levels of asymmetry of information, firms that issue seasoned equity offerings (SEOs) within a year of their initial public offering (IPO) (follow-on SEOs) are able to offer shares at a lower discount as compared to more mature firms. We provide evidence that this seeming contradiction can be explained by a very high degree of demand for the follow-on offering. We find that the likelihood of issuing a follow-on SEO is significantly related to the level of institutional demand and that discounts are lower for follow-on SEOs in which institutional demand is high. We also consider the joint effect of cash holdings and follow-on SEOs on discounts since firms that have recently gone public tend to hold high levels of cash. Underpricing is higher for firms with elevated preoffer levels of cash, which is consistent with market timing predictions. However, this relation is mitigated for both follow-on SEOs and issues that also have high share demand.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126866722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The presented study shows how Bain Capital and other Buyout Investment Firms applied Dividend Recap Schemes to financially benefit from their portfolio companies. The so generated distributions represented a large portion of the overall financial success from these investments. Although these schemes made the investments highly profitable for the buyout funds and their investors, it can be assumed that the involved portfolio firms were financially hurt in the process.
{"title":"Dividend Recaps and IPO Proceeds - The Untold Story of Bain Capital's Financial Success","authors":"Sven Furth, Christian Rauch","doi":"10.2139/SSRN.2199215","DOIUrl":"https://doi.org/10.2139/SSRN.2199215","url":null,"abstract":"The presented study shows how Bain Capital and other Buyout Investment Firms applied Dividend Recap Schemes to financially benefit from their portfolio companies. The so generated distributions represented a large portion of the overall financial success from these investments. Although these schemes made the investments highly profitable for the buyout funds and their investors, it can be assumed that the involved portfolio firms were financially hurt in the process.","PeriodicalId":445238,"journal":{"name":"ERPN: Initial Public Offerings (IPOs) (Sub-Topic)","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132492762","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：