IPO Suspensions and Venture Capital Activity

Suchard, Jo‐Ann; Humphery‐Jenner, Mark; Qiu, Zhiyi

doi:10.2139/ssrn.3788720

Cited by 4 publications

(3 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Since VCs are important participants in the IPO process, the literature has also studied the spillover effects of IPO suspension on VC activities. For example, Suchard et al (2021) find that IPO suspension depresses the investment of VCs during the IPO suspension period and hurts the fundraising of VCs in the future.…”

Section: Governmental Intervention In the Ipo Marketmentioning

confidence: 99%

“…First, our analysis provides new insights regarding the economic consequences of market suspensions. Existing studies suggest that IPO suspensions reduce IPO firms' post‐IPO performance (Song & Xin, 2017), corporate innovation (Cong & Howell, 2021) and corporate social responsibility (CSR) (Li et al, 2022), and VC activity (Suchard et al, 2021). We extend this line of literature by documenting the evidence that IPO suspensions can improve the pricing of affected IPOs.…”

Section: Introductionmentioning

confidence: 99%

“…Second, we identify a mechanism through which IPO suspension affects IPO pricing. Suchard et al (2021) suggest that IPO suspension makes it difficult for VCs to exit companies through IPOs and will decrease contemporaneous VC investment. We argue that firms pricing IPOs at higher levels can compensate VC-like pre-IPO investors for their costs incurred from the exit delay.…”

mentioning

confidence: 99%

See 2 more Smart Citations

IPO suspension and pricing: Evidence from China

Zhao

Shen

Huang

2023

Accounting & Finance

View full text Add to dashboard Cite

Securities regulators in China occasionally suspend their IPO market. We explore the impact of IPO market suspension on IPO pricing. We find that IPOs interrupted by market suspensions are eventually priced at a higher level. The positive impact of IPO suspension on IPO offer price is more pronounced for IPOs backed by venture capitalists (VCs) and/or those with higher VC ownership. Further, we find that IPOs affected by market suspensions show poorer post‐IPO performance, and higher post‐IPO earnings management. Suspension‐affected firms ask for lower offer prices on seasoned equity offerings (SEOs) if they price their IPO shares at a higher level. Combined, our findings suggest that IPO suspensions result in an unexpected wealth transfer from secondary market investors to pre‐IPO investors, and thus the higher offer price for suspension‐affected IPOs is a manifestation of the wealth transfer.

show abstract

Section: Governmental Intervention In the Ipo Marketmentioning

confidence: 99%