The effects of stricter regulation on the going public decision of small and knowledge‐intensive firms

Engelen, Peter‐Jan; Meoli, Michele; Signori, Andrea; Vismara, Silvio

doi:10.1111/jbfa.12417

Cited by 22 publications

(2 citation statements)

References 100 publications

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“…Market regulation and corporate governance play a significant role in determining the likelihood of private equity‐funded ventures filing for IPO (e.g., Cattaneo et al, 2015; Engelen et al, 2020). For example, Ewens and Farre‐Mensa (2020) demonstrate that deregulation can decrease the probability of companies going public.…”

Section: Literature Reviewmentioning

confidence: 99%

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

Hirschmann,

Fisch

2023

Financ Manag Account

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With the global rise of impact investments to achieve societal goals, an increasing number of new ventures that aim to create societal impact now seek to go public. However, while many conceptual studies suggest that impact investors are less likely to pursue financially oriented exit plans in exchange for generating societal impact, there is little empirical evidence to back up this claim. Using a propensity score matching approach, we draw on data from Crunchbase and empirically compare the initial public offering (IPO) performance of a large sample of 3398 investments by impact investors with 3398 investments by matched venture capital (VC) investors. We find that impact investor investments are less likely to lead to an IPO than VC investments. Besides, our results indicate that syndication by impact investors increases the likelihood of an IPO. This suggests that companies funded by impact investors benefit more from syndication than their VC‐funded counterparts. Our findings have practical implications for impact investors, portfolio ventures, and policymakers.

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Section: Literature Reviewmentioning

confidence: 99%

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

Hirschmann,

Fisch

2023

Financ Manag Account

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“…The cost of capital is the first mechanism through which securities law enforcement affects investment syndication network density. At the time of first investment, VC‐backed firms seek an exit outcome typically in 3–5 years through an IPO or an acquisition during which VCs typically add value and certification to the entrepreneurial firm (Akyol et al, 2014; Bernstein et al, 2019; Black & Gilson, 1998; Carpentier et al, 2010; Cattaneo et al, 2015; D. J. Cumming & Johan, 2013; Engelen et al, 2020; Johan, 2010; Takahashi & Yamada, 2015; Vismara et al, 2012). The transition from a private to a public firm is facilitated by private enforcement of securities laws, which codify arrangements covering disclosure and liability standards, thereby aiding in the efficiency of private transactions by clarifying liability rules and standardizing security contracts (La Porta et al, 2006).…”

Section: Theoretical Background and Hypothesesmentioning

confidence: 99%

Misconduct risks, legal enforcement and venture capital networks

Cumming

Mohammadi

Zambelli

2021

Euro Fin Management

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This study investigates the differing role of enforcement on the formation of venture capital (VC) syndication networks. We conjecture that public enforcement, with strong investigative powers against any syndicate member, discourages the formation of denser syndication networks due to misconduct risk by a member. By contrast, private enforcement, with strong disclosure and liability standards, enables denser syndication networks, through clear liability rules, standardized securities contracts and cost-sharing amongst syndicate members. Our VC data from 31 countries show a negative impact of public enforcement on VC networks and partially support the positive impact of private enforcement depending on cultural conditions.

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Graduation of initial public offering firms from junior stock markets: evidence from the Tokyo Stock Exchange

Honjo

Kurihara

2022

Small Bus Econ

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This study explores the graduation of initial public offering (IPO) firms and regulatory reforms in junior stock markets. Using firms listed on the two junior stock markets of the Tokyo Stock Exchange (TSE), the Market of the high-growth and emerging stocks (MOTHERS) and JASDAQ Securities Exchange (JASDAQ), we examine the factors that affect the time to graduation to the TSE main markets. We find that young IPO firms and those with high research and development (R&D) intensity are less likely to graduate from the TSE junior markets (MOTHERS and JASDAQ). The results also reveal that listing regulations on graduation to the TSE main market, which were introduced only to the MOTHERS, but not to the JASDAQ, accelerate the graduation of IPO firms. Furthermore, we provide evidence that IPO firms that ultimately graduate to the TSE main markets exhibit better performance.

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The effects of stricter regulation on the going public decision of small and knowledge‐intensive firms

Cited by 22 publications

References 100 publications

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

IPO performance of portfolio ventures funded by impact investors versus venture capital investors

Misconduct risks, legal enforcement and venture capital networks

Graduation of initial public offering firms from junior stock markets: evidence from the Tokyo Stock Exchange

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