Arbeitspapier
Exit timing of venture capitalists in the course of an initial public offering
We analyze the desinvestment decision of venture capitalists in the course of an IPO of their portfolio firms. The capital market learns of the project quality only in the period following the IPO. Venture capitalists with high-quality firms face a trade-off between immediately selling their stake in the venture at a price below the true value and having to wait until the true value is revealed. We show that the dilemma may be resolved via a reputation-acquiring mechanism in a repeated game set-up. Thereby, we can explain, e.g., the advent of 'hot-issue market behavior' involving early disinvestments and a high degree of price uncertainty. Furthermore, we provide a new rationale for underpricing. Young venture capitalists may use underpricing as a device for credibly committing themselves to acquiring reputation.
- Language
-
Englisch
- Bibliographic citation
-
Series: CFS Working Paper ; No. 2002/07
- Classification
-
Wirtschaft
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
Information and Market Efficiency; Event Studies; Insider Trading
Asymmetric and Private Information; Mechanism Design
- Subject
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Exit Decisions
Venture Capital
IPO
Underpricing
- Event
-
Geistige Schöpfung
- (who)
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Neus, Werner
Walz, Uwe
- Event
-
Veröffentlichung
- (who)
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Goethe University Frankfurt, Center for Financial Studies (CFS)
- (where)
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Frankfurt a. M.
- (when)
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2002
- Handle
- URN
-
urn:nbn:de:hebis:30-9972
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Neus, Werner
- Walz, Uwe
- Goethe University Frankfurt, Center for Financial Studies (CFS)
Time of origin
- 2002
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Entry-Exit Timing and Profit Sharing
The Initial Coin Offering (ICO) process: Regulation and risks
Exit-Strategien deutscher Venture-Capital-Gesellschaften
The Corporate Venture Capital Exit Decision
Börsenrechtliche Aspekte eines Initial Public Offering (IPO) in der Schweiz
Initial Coin Offering (ICO) : Unternehmensfinanzierung auf Basis der Blockchain-Technologie
Initial Capital Constraints hinder Entrepreneurial Venture Performance
Exit timing of venture capitalists in the course of an initial public offering
Realoptionen im Investment-Banking : Mergers & Acquisitions, Initial public offering, Venture-Capital
Venture capital exit rights
Venture capital exit rights
IPO : eine Gesamtbetrachtung von Initial Public Offering
Entry-Exit Timing and Profit Sharing
The Initial Coin Offering (ICO) process: Regulation and risks
Exit-Strategien deutscher Venture-Capital-Gesellschaften
The Corporate Venture Capital Exit Decision
Börsenrechtliche Aspekte eines Initial Public Offering (IPO) in der Schweiz
Initial Coin Offering (ICO) : Unternehmensfinanzierung auf Basis der Blockchain-Technologie