Are VC-backed IPOs delayed trade sales? |
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| Institution: | 1. Goethe University Frankfurt, Germany;2. Goethe University Frankfurt, CFS and SAFE, Germany;1. University of Manitoba, 181 Freedman Crescent, Winnipeg, MB R3T 5V4, Canada;2. University of Waterloo, 200 University Avenue West, Waterloo, ON N2L 3G1, Canada;3. University of Ottawa, 55 Laurier Avenue East, Ottawa, ON K1N 6N5, Canada;4. University of Lethbridge, 4401 University Drive, Lethbridge, AB T1K 3M4, Canada;1. Faculty of Economics and Business, Department of Finance and Accounting, University of Las Palmas de Gran Canaria, Campus Universitario de Tafira, 35017-Las Palmas de Gran Canaria, Spain;2. Faculty of Economics and Business, Department of Management and Finance, University of Murcia, Campus Universitario de Espinardo, 30100-Murcia, Spain;1. University of Durham, UK;2. Bangor University, UK;3. Institute of Finance Management, Tanzania;4. Bank Negara Malaysia (Central Bank of Malaysia), Malaysia;1. Fulton Hall 336, Carroll School of Management, Boston College, Chestnut Hill, MA 02467, United States;2. College of Management, University of Massachusetts Boston, MA 02125, United States;3. 414C Hayden Hall, D''Amore-McKim of Business, Northeastern University, Boston, MA 02115, United States;1. WHU, Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany;2. Université Lille Nord de France, SKEMA Business School, Avenue Willy Brandt, 59777 Euralille, France |
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| Abstract: | We investigate the role of venture-backing at the time of the initial public offering for the decision to subsequently be taken over and leave the exchange. We show, controlling for firm characteristics as well as the endogeneity of the involvement of VC, that VC-backed firms are significantly more likely to leave the exchange in the course of a take over. Our analysis sheds new light on decisions to go private, and even more so on the process of going public for VC-backed firms. Our findings suggest that, in a significant number of cases, VC-backed IPOs can be interpreted as delayed trade sales. |
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