Quotation Falconieri, Sonia, Filatotchev, Igor, Tastan, Mesut. 2019. Size and diversity in VC syndicates and their impact on IPO performance. European Journal of Finance. 25 (11), 1032-1053.


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Abstract

This paper investigates the impact of venture capital (VC) syndicate size and composition on the IPO and post-IPO performances of investee companies in an attempt to shed some light on the extent to which larger and more diverse syndicates are more likely to suffer from internal agency problems which might hinder the decision-making process and lead to less value added for their portfolio companies. The question is of great relevance because, while the vast majority of the empirical literature compares VC backed IPOs with non-VC backed ones, most VC funding is provided by syndicates of two or more financiers. We construct alternative measures of size as well as diversity based on several VC characteristics such as age, geographic location, type and affiliation of VC firms and find that larger and more diverse syndicates are associated with higher underpricing and lower valuation at the IPO date. Furthermore, we provide evidence that that diversity and size are negatively correlated to the long-term performance of the IPO firms and this finding is robust to several alternative measures of long-term performance.

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Publication's profile

Status of publication Published
Affiliation External
Type of publication Journal article
Journal European Journal of Finance
Citation Index SSCI
WU-Journal-Rating new FIN-A, STRAT-B, VW-D, WH-B
Language English
Title Size and diversity in VC syndicates and their impact on IPO performance
Volume 25
Number 11
Year 2019
Page from 1032
Page to 1053
Reviewed? Y
DOI http://dx.doi.org/10.1080/1351847X.2018.1560345
Open Access N

Associations

People
Filatotchev, Igor (Details)
External
Falconieri, Sonia (Cass Business School, United Kingdom)
Tastan, Mesut (University of Westminster, United Kingdom)
Organization
Competence Center for Emerging Markets and CEE WE (Details)
Institute for International Business (Dikova) (Details)
Institute for International Business IN (Details)
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