A Study of Buyout-, Venture Capital-, and Non-backed IPOs and the Actual Efficiency of Debt

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: Title: A Study of Buyout-, Venture Capital-, and Non-backed IPOs and the Actual Efficiency of Debt Course: NEKH02, Economics: Bachelor Essay - Ekonomie kandidatprogrammet, 15 credits Authors: Ofelia Aspemyr & Rebecka Lundgren Månsson Advisor: Jens Forssbaeck Keywords: Private equity, buyout, venture capital, financial sponsors, initial public offerings, capital structure, long-term IPO performance Purpose: The principal purpose of this paper is to examine whether there exist any differences in long-term performance between buyout-, venture capital-, and non-backed IPOs. This paper discusses if the different issuers could theoretically have any impact on long-term IPO performance. Further, the paper's purpose is to describe the capital structure’s influence on long-term performance. Methodology: This paper uses a quantitative methodology with a hypothetical-deductive method. In order to investigate the effect of independent variables, on the long-term stock performance, data was collected. Theoretical perspectives: The foundation for this paper is previous research examining the impact of different sponsors on long-term performance on Nordic IPOs. Empirical foundation: The paper consists of 193 IPOs- 20 venture capital-, 62 buyout-, and 111 non-backed IPOs. Data is collected from the Nordic stock market between 2006 and 2016. Conclusions: The result confirmed a significant relationship between buyout-backed IPOs and long-term abnormal returns. No evidence of a statistically significant relationship between venture capital-backed IPOs and long-term abnormal performance was found. Furthermore, this paper found that the level of debt-to-equity had a significant impact on long-term abnormal returns.

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