IPO withdrawals: Are corporate governance and VC characteristics the guiding light in the rough sea of volatile markets?
Journal
Journal of Corporate Finance
Type
journal article
Date Issued
2021-04
Author(s)
Abstract
More than 25% of all US firms that file for an IPO withdraw their offering from registration. Our study, which includes 3438 US domestic first-time IPO filings between 1997 and 2014, examines whether in times of high market volatility, high-quality corporate governance and VC backing may serve as a signal and thus reduce the withdrawal probability. Our results from an interaction term analysis support the view that corporate governance characteristics, but not the VC backing per se, tend to provide signals in highly volatile markets. In addition, our paper delves into the effect of VC characteristics. Local VCs tend to reduce the withdrawal probability. The same holds for VC syndication, particularly in highly volatile markets. Finally, our findings lend support to the conclusion that in highly volatile environments, reputable VCs tend to follow the dual-track strategy or postpone the IPO of their portfolio firms more often than in less volatile markets.
Language
English
Keywords
Initial public offering
Withdrawal
Volatile market
Corporate governance
Venture capital
Withdrawal
Volatile market
Corporate governance
Venture capital
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Volume
67
Number
101908
Subject(s)
Division(s)
Eprints ID
262801
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open.access
Name
IPO withdrawals Are corporate governance and VC characteristics the guiding light in the rough sea of volatile markets.pdf
Size
2.62 MB
Format
Adobe PDF
Checksum (MD5)
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