The role of venture capital in the creation of public companies. Evidence from the going-public process

Christopher B. Barry, Chris J. Muscarella, John W. Peavy, Michael R. Vetsuypens

Research output: Contribution to journalArticle

545 Citations (Scopus)

Abstract

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.

Original languageEnglish (US)
Pages (from-to)447-471
Number of pages25
JournalJournal of Financial Economics
Volume27
Issue number2
DOIs
StatePublished - Jan 1 1990

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Initial public offerings
Monitoring
Venture capital
Going public
Venture capitalists
Capital markets
Underpricing
Equity

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management

Cite this

Barry, Christopher B. ; Muscarella, Chris J. ; Peavy, John W. ; Vetsuypens, Michael R. / The role of venture capital in the creation of public companies. Evidence from the going-public process. In: Journal of Financial Economics. 1990 ; Vol. 27, No. 2. pp. 447-471.
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The role of venture capital in the creation of public companies. Evidence from the going-public process. / Barry, Christopher B.; Muscarella, Chris J.; Peavy, John W.; Vetsuypens, Michael R.

In: Journal of Financial Economics, Vol. 27, No. 2, 01.01.1990, p. 447-471.

Research output: Contribution to journalArticle

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