Venture Capital‐Backed and Commitments Test Entity Initial Public Offerings on the ASX

Murgulov, Zoltan and Marsden, Alastair and Rhee, Ghon S and Veeraraghavan, Madhu (2017) Venture Capital‐Backed and Commitments Test Entity Initial Public Offerings on the ASX. Accounting and Finance.

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Abstract

This paper examines initial returns to venture capital (VC) backed and non‐VC‐backed IPO companies on the Australian Securities Exchange (ASX). We find support for the theoretical predictions of Rossetto (2008), by providing empirical evidence that VC‐backed CTE IPOs exhibit greater wealth losses to pre‐IPO investors compared to non‐VC‐backed CTE IPOs during hot issue markets. We also find that greater retained ownership increases IPO underpricing. In the subsample of IPOs with below the median level of retained ownership IPOs, VC‐backed CTE IPOs and VC‐backed, non‐CTE IPOs have significantly higher levels of underpricing and wealth loss compared to non‐VC‐backed, non‐CTE IPOs.

Item Type:	Article
Uncontrolled Keywords:	: Initial public offerings; Underpricing: Wealth losses; Venture capital; Commitments test entity
Subjects:	Finance > Accounting
Divisions:	Finance and Strategy
Depositing User:	Ms. Sachitha R
Date Deposited:	21 Sep 2018 09:06
Last Modified:	11 Jan 2019 09:16
URI:	http://tapmi.informaticsglobal.com/id/eprint/116

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