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Korean J Financ Stud > Volume 46(3); 2017 > Article
Korean Journal of Financial Studies 2017;46(3):559-589.
DOI: https://doi.org/10.26845/KJFS.2017.06.46.3.559    Published online June 30, 2017.
Dark Side of Venture Capital Investment in IPOs
Seok Kim, Sang-Gyung Jun
벤처캐피탈 투자의 부정적 효과
김석, 전상경
한양대학교
Abstract
Prior literature on IPO reports that venture capitalists play a certification role on valuation of IPO shares, and thus contribute to reducing IPO underpricing. If certification role of venture capitalists is effectively executed, offer prices of venture-capital-backed IPO shares would fairly reflect their intrinsic value. In this case, we expect positive longrun performance of venture-capital-backed IPOs. Our empirical evidence, however, does not support the hypothesis of certification role of venture capitalists. Long-run share price performance or operational performance was inferior in venture-capital-backed IPOs. If venture capital ownership is higher, or if ownership of venture capitalists to major shareholders is higher, then the long-run underperformance of IPO shares is stronger. We also examined why some venture capitalists do not sell out their shares in IPOs even after their lock-up period is expired. Our empirical results imply that venture capitalists keep their IPO shares when they continue to be under-performing after trading in the market. Our empirical evidence generally show that certification role of venture capitalists does not hold from the long-run perspective.
Key Words: 벤처캐피탈,보증역할,공모주,기업공개,IPO,Venture Capital,Certification Role,Monitoring,Investment Behavior
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