Do Venture Capitalists Add Value to Small Manufacturing Firms? An Empirical Analysis of Venture and Nonventure Capital-Backed Initial Public Offerings

Posted: 24 Nov 2009

See all articles by James C. Brau

James C. Brau

Brigham Young University

Richard Brown

Brigham Young University - Marriott School

Jerome Osteryoung

Florida State University - Department of Finance

Date Written: 2004

Abstract

Researchers have completed a few studies to determine if performance differences exist between venture capital-backed firms and nonventure-backed firms.This research attempts to extend this research through further exploration of the following three areas:1) small businesses that performed an initial public offering (IPO) from 1990-96; 2) manufacturers that achieved an IPO; and 3) four dimensions utilized to determine IPO success, including initial underpricing, stock performance, sales growth, and survivability. The data for this study are collected from the Security Data Company's (SDC) new issues database, and the criteria required of subjects of this study are described, including being listed on the Center for Research in Security Prices (CRSP) database.After using the screening criteria, the qualifying VC-backed IPOs were identified, and similar criteria were used to create a control sample.A description of the univariate and multivariate analyses of the data regarding IPO performance is provided. Following the data analysis, no evidence existed to support either hypothesis, indicating that difference existed between the initial underpricing, three-year sales growth, three-year cumulative stock returns, and three-year survivability between VC and nonVC-backed IPOs.(AKP)

Keywords: Experimental/primary research, Firm performance, Public firms, Financing, Venture capital, Public offerings, Manufacturing industries, Survival rates, Initial public offerings (IPO)

Suggested Citation

Brau, James C. and Brown, Richard and Osteryoung, Jerome, Do Venture Capitalists Add Value to Small Manufacturing Firms? An Empirical Analysis of Venture and Nonventure Capital-Backed Initial Public Offerings (2004). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1511044

James C. Brau (Contact Author)

Brigham Young University ( email )

TNRB 640
Marriott School
Provo, UT 84602
United States
801-318-7919 (Phone)
801-422-0108 (Fax)

HOME PAGE: http://marriottschool.byu.edu/emp/brau/

Richard Brown

Brigham Young University - Marriott School

United States

Jerome Osteryoung

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
534
PlumX Metrics