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

  • This paper analyzes a comprehensive data set of 160 non venture-backed, 79 venture-backed and 61 bridge financed companies going public at Germany´s Neuer Markt between March 1997 and March 2002. 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 analysis provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VC-backed 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 r)
Document Type:Working Paper
Year of Completion:2003
Year of first Publication:2003
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Initial Public Offering; Neuer Markt; Underpricing; Underwriter; Venture Capital
GND Keyword:Deutschland; Börsenzulassung; Going Public; Wertpapieremission; Unternehmensgründung; Risikokapital; Börsenkurs; Kapitalertrag; Kapitalgewinn; Schätzung; Neuer Markt <Börse>; Neuer Markt; New Economy; Geschichte 1997-2000
Issue:Version: November 6, 2003
Page Number:43
First Version: February 26, 2001 ; Version: November 6, 2003
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