The value of ongoing venture capital investment to newly listed firms

Abstract

We examine whether the market values continuing venture capital (VC) investor involvement in firms post-IPO. Compared to the US, Australian VC investors exit their investments post-IPO by on-market sales rather than distribution of holdings to their investors. Lockup periods tend to be longer and ownership thresholds for reporting trades lower. We find that the market responds positively to buy transactions, negatively to sell transactions of VC investors and negatively to the resignation of VC directors. These results are consistent with VC investors in the firm having a positive influence and creating value from which the VCs and other shareholders benefit.

Accounting conservatism and firm performance during the COVID‐19 pandemic

“…where X is earnings per share, R is stock returns, D is a dummy variable equal to one when R < 0 and zero otherwise, SIZE is firm size computed as the natural logarithm of total assets (Abu Bakar et al, 2020;Keshk et al, 2020), LEV is the leverage ratio, defined as total debts divided by total assets (Hsu et al, 2020), and MB is the market-to-book ratio (Wei et al, 2020). To estimate conservatism prior to the Covid-19 outbreak, all variables in Equation ( 1) are measured in the fiscal period ending before 1 January 2020.…”

Employee disclosures in the grocery industry before the COVID‐19 pandemic

“…Size is measured by log of assets (Keshk et al, 2020). Leverage is an estimate of creditor power (Kent and Zunker, 2017) and measured by total liabilities divided by total assets at balance date (Hsu et al, 2020). ROA is measured by net profit after tax divided by total assets at balance date.…”

Venture capital and methods of payment in mergers and acquisitions

“…Instead, they sell shares of IPO firms to the public market months or years after (Cumming & MacIntosh, 2003; Field & Hanka, 2001). However, more recent studies show that VCs continue to hold shares of IPO firms beyond the lockup period (Celikyurt et al., 2014; Hsu et al., 2020; Krishnan et al., 2011) and continue to invest in the IPO firms (e.g., Iliev & Lowry, 2020).…”

“…Instead, they sell shares of IPO firms to the public market months or years after (Cumming & MacIntosh, 2003;Field & Hanka, 2001). However, more recent studies show that VCs continue to hold shares of IPO firms beyond the lockup period (Celikyurt et al, 2014;Hsu et al, 2020;Krishnan et al, 2011) and continue to invest in the IPO firms (e.g., Iliev & Lowry, 2020). 1 Similarly, when VCs exit their investments through M&As, they also need to choose between cash or acquirers' stock as the method of payment (Cumming, 2008;Cumming & MacIntosh, 2003).…”