Public Market Players in the Private World: Implications for the Going-Public Process

• 成果类型: Article
• 署名作者: Huang, Shiyang; Mao, Yifei; Wang, Cong (Roman); Zhou, Dexin
• 署名单位: University of Hong Kong; Cornell University; Texas Tech University System; Texas Tech University; City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa092
• 发表日期: 2021
• 页码: 2411
• 关键词: cross-section; venture; INVESTMENT; INFORMATION; allocation; liquidity; demand

摘要

We investigate the effect of pre-IPO investments by public market institutional investors (institutions) on the exit of venture capitalists (VCs). Results indicate that institutions' pre-IPO investments reduce IPO underpricing by mitigating VCs' reliance on all-star analysts to boost market liquidity. We conclude that institutions facilitate VC exits in the secondary market. Supporting this view, our analysis reveals that the presence of institutions allows VCs to exit with a reduced price impact in the secondary market. Consistent with the ease of exit, VCs offer fewer shares at the IPO and are more likely to invest in institutionally backed startups.