Effects of venture capitalists' participation on listed companies

Abstract

We examine the effects of venture capital (VC) firms on VC backed listed companies empirically. Previous studies show the VC value-added in less underpricing and better post-IPO operational performance ofYC backed IPOs. We compare YC and non-YC backed firms listed in Singapore and find the effects of venture capitalists' participation are rather complicated. The post-IPO operating performance of VC backed companies is inferior though they are less underpriced in the IPO. Furthermore, we find that IPOs backed by older YC finns perform better. Thus we confirm the grandstanding model that young YC firms bring their portfolios to the market prematurely.