Journal article
Venturing beyond the IPO: Financing of Newly Public Firms by Venture Capitalists
The Journal of finance (New York), v 75(3), pp 1527-1577
01 Jun 2020
Abstract
Contrary to conventional wisdom, we document that approximately 15% of venture capitalist (VC)-backed firms raise additional capital from VCs in the five years after going public. We propose two explanations for why firms revert to VC financing post-IPO (initial public offering). First, we hypothesize that VC participation in post-IPO financing represents an efficient solution to informational problems that would otherwise constrain firms' abilities to exploit value-increasing investments. Analyses of firm and VC characteristics, together with the finding that these investments are value-increasing for both VCs and the underlying companies, support this hypothesis. We find no support for the alternative that agency conflicts motivate these investments.
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Details
- Title
- Venturing beyond the IPO: Financing of Newly Public Firms by Venture Capitalists
- Creators
- Peter Iliev - FinanceMichelle Lowry - Drexel Univ, Philadelphia, PA 19104 USA
- Publication Details
- The Journal of finance (New York), v 75(3), pp 1527-1577
- Publisher
- Wiley
- Number of pages
- 51
- Grant note
- Raj & Kamla Gupta Governance Institute
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000535684500009
- Other Identifier
- 991019167753504721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics