TY - JOUR
T1 - The role of venture capital in the creation of public companies. Evidence from the going-public process
AU - Barry, Christopher B.
AU - Muscarella, Chris J.
AU - Peavy, John W.
AU - Vetsuypens, Michael R.
PY - 1990/10
Y1 - 1990/10
N2 - We examine an exhaustive set of initial public offerings (IPOs) by venture-capital-backed companies between 1978 and 1987. We find that venture capitalists specialize their investments in firms to provide intensive monitoring services. Consistent with their monitoring role, the venture capitalists take concentrated equity positions, maintain their investment beyond the IPO, and serve on the boards of their portfolio firms. The quality of their monitoring services appears to be recognized by capital markets through lower underpricing for IPOs with better monitors.
AB - We examine an exhaustive set of initial public offerings (IPOs) by venture-capital-backed companies between 1978 and 1987. We find that venture capitalists specialize their investments in firms to provide intensive monitoring services. Consistent with their monitoring role, the venture capitalists take concentrated equity positions, maintain their investment beyond the IPO, and serve on the boards of their portfolio firms. The quality of their monitoring services appears to be recognized by capital markets through lower underpricing for IPOs with better monitors.
UR - http://www.scopus.com/inward/record.url?scp=0001671710&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0001671710&partnerID=8YFLogxK
U2 - 10.1016/0304-405X(90)90064-7
DO - 10.1016/0304-405X(90)90064-7
M3 - Article
AN - SCOPUS:0001671710
SN - 0304-405X
VL - 27
SP - 447
EP - 471
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 2
ER -