UNDERPRICING OF VENTURE-BACKED AND NON VENTURE-BACKED IPOS: GERMANY’S NEUER MARKT

Abstract

This chapter investigates whether non venture-backed, venture-backed and bridge financed companies going public on Germany’s Neuer Markt differ with regard to issuer characteristics, balance sheet data or offering characteristics. Moreover, this chapter contributes to the underpricing literature by focusing on the role of venture capitalists and underwriters in certifying the quality of a company. 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 reduced ex-ante uncertainty. This analysis provides evidence to the contrary: VC-backed IPOs appear to be more underpriced than non VC-backed IPOs.

Citation

Franzke, S.A. (2004), "UNDERPRICING OF VENTURE-BACKED AND NON VENTURE-BACKED IPOS: GERMANY’S NEUER MARKT", Giudici, G. and Roosenboom, P. (Ed.) The Rise and Fall of Europe's New Stock Markets (Advances in Financial Economics, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 201-230. https://doi.org/10.1016/S1569-3732(04)10009-1