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How do financial institutions affect the IPO underwriting process when they are venture investors ?
| Content Provider | Semantic Scholar |
|---|---|
| Copyright Year | 2007 |
| Abstract | Financial institutions are venture investors in a m jority of U.S. venture-backed IPOs in the 1993-200 0 period. Exploiting the fact that each class of fina nci l institutions has its own investment criteria and expertise and access to customer information, we ev aluate whether venture investments by commercial banks, investment banks and insurance companies hav e independent effects on the equity underwriting process, whether the effects are a function of inve stm nt size and whether loans and equity investment s have differential effects. We find that each class of financial institutions making venture investment s in a firm going public is associated with security offer ing outcomes indicating lower adverse selection ris k such as reduced underpricing and absolute offer pri ce evisions and stronger long-term operating performance. The impacts of debt or equity investme n s by separate classes of financial institutions a re largely additive. Moreover, the size of financial i nstitution ownership in an issuer is more informati ve than the presence of financial institution investor . This body of evidence is consistent with equity holdings and loans by each class of financial insti tutions providing independent certification of issu er quality. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://business.rice.edu/uploadedFiles/Faculty_and_Research/Academic_Areas/Finance/Seminar_PDFs/masulis_091307.pdf |
| Alternate Webpage(s) | http://www.business.rice.edu/uploadedFiles/Faculty_and_Research/Academic_Areas/Finance/Seminar_PDFs/masulis_091307.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
