Venture Capital Backing, Investor Attention, and Initial Public Offerings

@article{Chemmanur2018VentureCB,
  title={Venture Capital Backing, Investor Attention, and Initial Public Offerings},
  author={Thomas J. Chemmanur and Karthik Krishnan and Qianqian Yu},
  journal={Entrepreneurship \& Finance eJournal},
  year={2018}
}
We propose and empirically analyze a new channel through which venture capitalists (VCs) may add value at IPO to the private firms that they invest in. We hypothesize that the IPOs of VC-backed firms garner greater “investor attention” (in the sense of Merton (1987)), allowing the IPO underwriters of such firms to perform two information-related roles more efficiently during the IPO book-building and road-show process: information dissemination, where the lead underwriter disseminates noisy… 
View on SSRN
finance.business.uconn.edu
7 Citations
Background Citations
1

7 Citations

Limited Attention, Legalized Bribery and the Initial Public Offering Process
An initial public offering (IPO) is one time when a company can legally ‘bribe’ institutional investors to pay attention to it – investors that regularly attend road shows and give reliable feedback…
The Role of Investor Attention in Seasoned Equity Offerings: Theory and Evidence
Models of seasoned equity offerings (SEOs) such as Myers and Majluf (1984) assume that all investors in the economy pay immediate attention to SEO announcements and the pricing of SEOs. In this…
Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures Financial Reporting
We investigate the impact of venture capital (VC) backing on the quality of disclosure controls and procedures, and the informativeness of entrepreneurial firms’ material weakness disclosures. We…
Review of IPO Primary Market Pricing Literature
The aim of this paper is to offer a comprehensive review of Initial Public Offering literature on the pricing and interactions that occur in the IPO primary market. Among the multitude of variables…
Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing
We use the presence of a Wikipedia article for initial public offering (IPO) firms to test theories of information asymmetry and investor awareness. While we find limited support for the former, our…
Firm Selection and Corporate Cash Holdingsú
Among stock market entrants, more firms over time are R&D–intensive with initially lower profitability but higher growth potential. This sample-selection e ect determines the secular trend in U.S.…
The reallocation effects of COVID-19: Evidence from venture capital investments around the world

References

SHOWING 1-10 OF 57 REFERENCES
Underwriter Networks, Investor Attention, and Initial Public Offerings
Using various centrality measures from social network analysis, we analyze how the location of a lead initial public offering (IPO) underwriter in its network of investment banks affects various IPO…
Institutional affiliation and the role of venture capital: Evidence from initial public offerings in Japan
Abstract 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 superior “certification” at the time of…
The Role of Venture Capital Backing in Initial Public Offerings: Certification, Screening, or Market Power?
We empirically distinguish between three possible roles of venture backing in IPOs: certification, where venture-backed IPOs are priced closer to intrinsic firm value than non-venture backed IPOs due…
Venture Capital Reputation and Investment Performance
Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings?
Prior studies suggest that venture capitalists (VCs) play a monitoring role. We predict and find that IPO‐year abnormal accruals are lower in the presence of VCs for a sample of 2,630 IPO firms…
Venture Capital Reputation, Post-IPO Performance and Corporate Governance
We examine the association of a venture capital (VC) firm’s reputation with the post-initial public offering (IPO) long-run performance of its portfolio firms. We find that VC reputation, measured by…
How investment bankers determine the offer price and allocation of new issues
Grandstanding, certification and the underpricing of venture capital backed IPOs
Signalling by underpricing in the IPO market
Valuation of Internet Stocks - an IPO Perspective
We empirically investigate valuations of Internet firms at various stages of the initial public offering (IPO) from two perspectives. First, we examine the association between the valuation of…
...
...