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Underpricing of corporate and independent venture capital-backed IPOs: Do they differ?

Author

Listed:
  • Fatima Shuwaikh

    (Léonard de Vinci Pôle Universitaire Research Center
    Paris-Est Créteil University)

  • Emmanuelle Dubocage

    (Paris-Est Créteil University)

  • Dennis Murer

    (Universidade Católica Portuguesa)

Abstract

Building on a resource-based view, this study argues that independent venture capital (IVC) firms and corporate venture capital (CVC) firms have different impacts on the underpricing of their backed initial public offerings (IPOs). This is due to their different resources, motivations, and interests. Using a sample of 612 VC-backed IPOs from 2000 to 2020, we find a significant difference in underpricing among CVC- and IVC-backed IPOs. The matching method used by Megginson and Weiss (1991) and propensity score matching both show significant differences in underpricing between CVC-backed and IVC-backed IPOs. This paper shows that the difference in the influence of CVC and IVC backing on underpricing in IPOs has changed over time. While there was a significant difference from 2000–2009 in our models, this difference was no longer present in the more recent period of 2010–2020.

Suggested Citation

  • Fatima Shuwaikh & Emmanuelle Dubocage & Dennis Murer, 2023. "Underpricing of corporate and independent venture capital-backed IPOs: Do they differ?," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1629-1650, May.
    • Handle: RePEc:kap:rqfnac:v:60:y:2023:i:4:d:10.1007_s11156-023-01144-5
    DOI: 10.1007/s11156-023-01144-5
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    More about this item

    Keywords

    Initial public offering; Corporate venture capital; Independent venture capital; Underpricing;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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