Abstract
This study examines the effect of venture capitalist (VC) prestige on the post-issue survivability of IPOs and how VC characteristics influence the effect. We find that IPOs backed by prestigious VCs are less likely to delist for performance failure and have longer listing duration relative to those without VC backing; however, IPOs backed by ordinary VCs are as likely to delist as IPOs without VC backing. The finding is robust for Internet and high-tech firms. We further examine heterogeneous VC characteristics and find that the ability of prestigious VCs to improve IPO survival is a function of their investment experience and managerial ability. VC prestige characterized by industry specialization and syndication networks is not related to IPO survival. Overall, the results suggest that the VC characteristics that produce prestige, rather than the prestige itself, drive the long-term survival of IPOs.
| Original language | English |
|---|---|
| Pages (from-to) | 843-863 |
| Number of pages | 21 |
| Journal | Small Business Economics |
| Volume | 40 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 2013 Jan 1 |
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All Science Journal Classification (ASJC) codes
- Business, Management and Accounting(all)
- Economics and Econometrics
Cite this
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How useful is venture capital prestige? Evidence from IPO survivability. / Chou, Ting-Kai; Cheng, Jia Chi; Chien, Chin Chen.
In: Small Business Economics, Vol. 40, No. 4, 01.01.2013, p. 843-863.Research output: Contribution to journal › Article
TY - JOUR
T1 - How useful is venture capital prestige? Evidence from IPO survivability
AU - Chou, Ting-Kai
AU - Cheng, Jia Chi
AU - Chien, Chin Chen
PY - 2013/1/1
Y1 - 2013/1/1
N2 - This study examines the effect of venture capitalist (VC) prestige on the post-issue survivability of IPOs and how VC characteristics influence the effect. We find that IPOs backed by prestigious VCs are less likely to delist for performance failure and have longer listing duration relative to those without VC backing; however, IPOs backed by ordinary VCs are as likely to delist as IPOs without VC backing. The finding is robust for Internet and high-tech firms. We further examine heterogeneous VC characteristics and find that the ability of prestigious VCs to improve IPO survival is a function of their investment experience and managerial ability. VC prestige characterized by industry specialization and syndication networks is not related to IPO survival. Overall, the results suggest that the VC characteristics that produce prestige, rather than the prestige itself, drive the long-term survival of IPOs.
AB - This study examines the effect of venture capitalist (VC) prestige on the post-issue survivability of IPOs and how VC characteristics influence the effect. We find that IPOs backed by prestigious VCs are less likely to delist for performance failure and have longer listing duration relative to those without VC backing; however, IPOs backed by ordinary VCs are as likely to delist as IPOs without VC backing. The finding is robust for Internet and high-tech firms. We further examine heterogeneous VC characteristics and find that the ability of prestigious VCs to improve IPO survival is a function of their investment experience and managerial ability. VC prestige characterized by industry specialization and syndication networks is not related to IPO survival. Overall, the results suggest that the VC characteristics that produce prestige, rather than the prestige itself, drive the long-term survival of IPOs.
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UR - http://www.scopus.com/inward/citedby.url?scp=84876664463&partnerID=8YFLogxK
U2 - 10.1007/s11187-011-9389-5
DO - 10.1007/s11187-011-9389-5
M3 - Article
VL - 40
SP - 843
EP - 863
JO - Small Business Economics
JF - Small Business Economics
SN - 0921-898X
IS - 4
ER -