A comparative study of venture capital influence on IPO performance in the US

Sammanfattning

In this paper, we compare the performance of venture capital-backed IPOs with the performance of non-venture capital-backed IPOs in the US from 1980 to 2020 using a variety of performance metrics such as Underpricing, Buy and Hold Abnormal Returns (BHAR), Property, Plant, and Equipment (PPE) as a measure of Investments, Return on Assets (ROA) and Sales Growth. We provide evidence that VC-backed IPOs portray strong long-term performance owing to high growth ambitions and strategic investments but often compromise profitability. One of the key focus areas of our study is the 2008 financial crisis. We find that during the crisis, VC-backed IPOs showed more resilience compared to their non-VC-backed counterparts. By controlling for industry and year-fixed effects, this study aims to provide evidence for the value-added and the dynamic role played by venture capitals in helping firms achieve strong IPO performance.