• Information Systems Review
• /
• v.21 no.2
• /
• pp.51-67
• /
• 2019

This study examines IPO underpricing and its interaction with investor attention as one of key factors that can affect post-IPO performance in the short- and long-run. With higher investor attention measured as Google searches around IPO dates, our empirical results show that IT firms are underpriced more severely than non-IT firms. We also demonstrate that investor attention is positively associated with IPO performance in the short-run for both IT and non-IT firms. However, the impact of investor attention is more sustained for IT firms over a longer time horizon when coupled with a high level of underpricing while its impact is neutralized for non-IT firms. Given the unique attributes such as network effects embedded in the IT industry, our findings suggest that IPO underpricing and its interplay with investor attention for IT firms play an important role in shaping long-run performance and ultimately affecting fundamental value.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.23 no.57
• /
• pp.41-49
• /
• 2000

This paper investigates the relation between operating performance and initial underpricing of companies that go public. A significant decline in operating performance subsequent to the initial public offering(IPO) is found. Additionally there is a significant positive relation between post-IPO operating performance and the level of initial underpricing.

• Asia-Pacific Journal of Business
• /
• v.13 no.2
• /
• pp.1-22
• /
• 2022

Purpose - The purpose of this study is to examine the effect of VC investment on the IPO and post-IPO performance of Chinese firms. Design/methodology/approach - By utilizing CSMAR and VentureXpert database, we construct a firm-year panel data covering all listed firms in the Chinese stock market from 2006 to 2018. Findings - First, we find that VC-backed firms are significantly less underpriced than non-VC-backed firms. Our results show that the initial IPO-day return of VC-backed firms is 0.16% lower than that of non-VC-backed firms. Next, we find that VC-backed firms demonstrate significantly worse operating performance than non-VC-backed firms after the IPO. In the next three years following the IPO, VC-backed firms underperform non-VC-backed firms by 0.4% in terms of ROA and by 0.6% in terms of ROE. Research implications or Originality - Our results support the Grandstanding Hypothesis, among several competing hypotheses regarding the effect of VC investment, which suggests that VCs window dress their IPO firms for their early exit at the expense of a poor operating performance of the IPO firms after going public.

• Journal of Technology Innovation
• /
• v.24 no.1
• /
• pp.143-167
• /
• 2016

The purpose of this study is to analyze changes of innovation activities and their performance in pre-IPO and post-IPO of KOSDAQ IPO listed companies in medical and pharmaceutical fields, which require high R&D investment, from 2000 to 2005 in Korea. The innovation efficiencies of the IPO companies were measured before and after three years based on the DEA model. The financial data and patent information of the listed company during total 6 years, which were 3 years before IPO and 3 years after IPO, were collected. The main results of this research are as follows. First, it took an average 12.86 years until IPO in the start-up of the IPO companies in the pharmaceutical sector, and innovation was on average more active than the IPO before. R&D investment was higher than the IPO before, and the number of the applied patent during 3 years after IPO was 16.67 which was increased from 8.43 during 3 years before IPO. In addition, the average scope of technology of the IPO companies was expanded from 11 to 22 technology fields during previous 3 year and after 3 year each, and financial growth after IPO was lower than the previous IPO. Second, the financial performance of R&D investment and the performance of patent activity were weakened in the efficiency after the IPO, and the integrated performance from the patenting activities and the R&D investment was decreased after the IPO. Finally, the efficiency of the financial performance of the patenting activity was lower than the efficiency of the financial performance of the patent and R&D investment and patent activities under the R&D investment. In particular, the inefficiency of the firms' patenting activities performance after the IPO was caused by the decreasing return to scale, according to the results of this study. This results implicate that the expansion of R&D investments through the IPO had not lead to the financial performance of the market, and that the overall inefficiency since the IPO is due to the inefficiencies at the stage for the outcome of innovation activity rather than the output obtained through the R&D investments that appear to lead the performance of the market.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.8 no.2
• /
• pp.21-33
• /
• 2013

This study analyzes the effects of diversification on business results and enterprise values of KOSDAQ-listed venture companies to inquire into the effective diversification strategies of venture companies after an initial public offering (IPO). In particular, this study used the Berry-Herfindahl index as a proxy variable regarding the level of diversification of venture companies, and categorized the diversification methods into M&As, strategic partnerships and establishment of subsidiaries to analyze the effects of the mutual interaction among such methods. The following is a summary of the results of the analysis. First, diversification did not have any statistically significant effects on business growth. However, it was found that there was an inverted U-shaped relationship between diversification and the profitability of the company. Second, although no statistical significance was found between enterprise values measured based on diversification and market value, a U-shaped relationship or positive relationship was found. Third, M&As were found to moderate the relationship between diversification and business results and enterprise values. Fourth, strategic relationship and establishment of subsidiaries was found to moderate the relationship between diversification and the profit results of the company. Based on the above findings, this study discovered the practical implications regarding the diversification of venture companies after listing on the KOSDAQ.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.17 no.2
• /
• pp.33-51
• /
• 2022

This study analyzes newly listed companies on KOSDAQ from 2011 to 2020 for both firms having experience in attracting venture investment before listing (VI) and those without having experience in attracting venture investment (NVI) by examining differences between two groups (VI and NVI) with respect to both the level of listing performance and that of firm performance (growth) after the listing. This paper conducts descriptive statistics, mean difference, and multiple regression analysis. Independent variables for regression models include VC investment, firm age at the time of listing, firm type, firm location, firm size, the age of VC, the level of expertise of VC, and the level of fitness of VC with investment company. Throughout this paper, results suggest that listing performance and post-listed growth are better for VI than NVI. VC investment shows a negative effect on the listing period and a positive effect on the sales growth rate. Also, the amount of VC investment has negative effects on the listing period and positive effects on the market capitalization at the time of IPO and on sales growth among growth indicators. Our evidence also implies a significantly positive effect on growth after listing for firms which belong to R&D specialized industries. In addition, it is statistically significant for several years that the firm age has a positive effect on the market capitalization growth rate. This shows that market seems to put the utmost importance on a long-term stability of management capability. Finally, among the VC characteristics such as the age of VC, the level of expertise of VC, and the level of fitness of VC with investment company, we point out that a higher market capitalization tends to be observed at the time of IPO when the level of expertise of anchor VC is high. Our paper differs from prior research in that we reexamine the venture ecosystem under the outbreak of coronavirus disease 2019 which stimulates the degradation of the business environment. In addition, we introduce more effective variables such as VC investment amount when examining the effect of firm type. It enables us to indirectly evaluate the validity of technology exception policy. Although our findings suggest that related policies such as the technology special listing system or the injection of funds into the venture ecosystem are still helpful, those related systems should be updated in a more timely fashion in order to support growth power of firms due to the rapid technological development. Furthermore, industry specialization is essential to achieve regional development, and the growth of the recovery market is also urgent.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.18 no.5
• /
• pp.63-75
• /
• 2023

This study conducted empirical analysis on the factors affecting the investment performance of 205 domestic venture funds (with a total liquidation amount of 7.25 trillion KRW) newly formed from 2007 to 2017 and completely liquidated as of the end of 2022. Due to the nature of private equity funds, obtaining empirical data is extremely challenging, especially for data post-COVID-19 era liquidations. Nevertheless, despite these challenges, it is meaningful to analyze the impact on the investment returns of domestic venture funds using the most recent data available from the past 10 years. This study categorized the factors influencing venture fund performance into external environmental factors and internal factors. External environmental factors included "economic cycles," "stock markets," "venture markets," and "exit markets," while internal factors included the fund management company's capabilities in terms of "experience," "professional personnel," and "assets under management (AUM)." The fund structure was also categorized into "fund size" and "fund length" for comparative analysis. In summary, the analysis yielded the following results: First, the 3-year government bond yield, which represents economic cycles well, was found to have a significant impact on fund performance. Second, the average 3-month KOSDAQ index return after fund formation had a statistically significant positive effect on fund performance. Third, the number of IPOs, indicating the competition intensity at the time of venture fund liquidation, was shown to have a negative effect on fund performance. Fourth, it was observed that the larger the AUM of the fund management company, the better the fund's returns. Finally, venture fund returns showed variations depending on the year of formation (Vintage). Therefore, when individuals consider investing in venture funds, it is considered a highly effective investment strategy to construct an investment portfolio taking into account not only external environmental factors and internal fund factors but also the vintage year.