Underpricing of venture-backed and non venture-backed IPOs : Germany's Neuer Markt

  • This paper analyzes a comprehensive data set of 108 non venture-backed, 58 venture-backed and 33 bridge financed companies going public at Germany s Neuer Markt between March 1997 and March 2000. I examine whether these three types of issues differ with regard to issuer characteristics, balance sheet data or offering characteristics. Moreover, this empirical study contributes to the underpricing literature by focusing on the complementary or rather competing role of venture capitalists and underwriters in certifying the quality of a company when going public. Companies backed by a prestigious venture capitalist and/or underwritten by a top bank are expected to show less underpricing at the initial public offering (IPO) due to a reduced ex-ante uncertainty. This study provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VCbacked IPOs.

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Author:Stefanie A. Franzke
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2001,01
Series (Serial Number):CFS working paper series (2001, 01)
Document Type:Working Paper
Year of Completion:2001
Year of first Publication:2001
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Accounting for Financial Instruments in the Banking Industry: Conclusions from a Simulation Model
GND Keyword:Deutschland; Börsenzulassung; Going Public; Wertpapieremission; Unternehmensgründung; Risikokapital; Börsenkurs; Kapitalertrag; Kapitalgewinn; Schätzung; Neuer Markt <Börse>; Neuer Markt; New Economy; Geschichte 1997-2000
Issue:September 22, 2001
Page Number:41
First Version: February 26, 2001 This Version: September 22, 2001
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht