TY - JOUR
T1 - The dark side of independent venture capitalists
T2 - Evidence from Japan
AU - Sun, Yue
AU - Uchida, Konari
AU - Matsumoto, Mamoru
N1 - Funding Information:
An earlier version of this paper was presented at the Asian Finance Association, the Annual Online Workshop on Venture Capital and Private Equity in the Asia Pacific Region, Midwest Finance Association, Japan Association for Applied Economics, Japan Finance Association, the Conference on the Theories and Practices of Securities and Financial Markets, and finance seminars at Kyushu University and Waseda University. We thank Yasuhiro Arikawa, Naohisa Goto, Shin-ichi Hirota, Nobuhiro Hibara, Yusuke Kinari, Katsuyuki Kubo, Kotaro Miwa, Hideaki Miyajima, Kyoko Nagata, Jo-Ann Suchard, Katsushi Suzuki, Naoki Watanabel, and the anonymous referee for their helpful comments and advice. This paper is financially supported by the JSPS KAKENHI Grant number 23330107 and Trust Companies Association of Japan .
PY - 2013/9
Y1 - 2013/9
N2 - Using Japanese firms that went public during the period 1998-2006, we find that independent venture capitalist-backed IPO firms are significantly younger and smaller than IPO companies backed by venture capital firms that are subsidiaries of financial institutions. IPOs backed by independent venture capitalists also tend to use less reputable underwriters and go public on stock exchanges with less strict listing requirements due to their immaturity. Young and small IPO companies experience significantly greater underpricing and poorer long-term operating performance. Taken all together, independent venture capitalists make lower quality companies go public than finance-affiliated venture capitalists.
AB - Using Japanese firms that went public during the period 1998-2006, we find that independent venture capitalist-backed IPO firms are significantly younger and smaller than IPO companies backed by venture capital firms that are subsidiaries of financial institutions. IPOs backed by independent venture capitalists also tend to use less reputable underwriters and go public on stock exchanges with less strict listing requirements due to their immaturity. Young and small IPO companies experience significantly greater underpricing and poorer long-term operating performance. Taken all together, independent venture capitalists make lower quality companies go public than finance-affiliated venture capitalists.
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U2 - 10.1016/j.pacfin.2013.02.001
DO - 10.1016/j.pacfin.2013.02.001
M3 - Article
AN - SCOPUS:84890144743
SN - 0927-538X
VL - 24
SP - 279
EP - 300
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
ER -