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Venture Capitalist Certification in Initial Public Offerings
Abstract
This paper provides support for the certification role of venture capitalists in initial public offerings. Consistent with the certification hypothesis, a comparison of venture capital backed IPOs with a control sample of nonventure capital backed IPOs from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads. In effect, the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm. In addition, we document that venture capitalists retain a significant portion of their holdings in the firm after the IPO.
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Citations
Cited by
N. Berger, A., & F. Udell, G. (1998) · Journal of Banking & Finance · doi:10.1016/s0378-4266(98)00038-7 · Cited by 3,690
Grandstanding in the venture capital industry
Gompers, P. A. (1996) · Journal of Financial Economics · doi:10.1016/0304-405x(96)00874-4 · Cited by 1,347
Ownership as a form of corporate governance
Connelly, B. L., Hoskisson, R. E., Tihanyi, L., & Certo, S. T. (2010) · Journal of Management Studies · doi:10.1111/j.1467-6486.2010.00929.x · Cited by 389
Metadata
- Authors
- Megginson, W. L., & Weiss, K. A.
- Venue
- The Journal of Finance
- Publisher
- Wiley
- Published
- 1991-07-01
- Volume
- 46
- Issue
- 3
- Pages
- 879-879
- ISSN
- 0022-1082 (ISSN-L)
- OpenAlex
- W3123110835
- Cited by
- 637
- References
- 0
- FWCI
- 11.18
- Type
- journal article
- Language
- en
- Open access
- closed
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Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
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How to cite
Cite CoChat for the checks on this page, and the paper for its own findings.
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- CoChat. (2026). Citation check: Venture Capitalist Certification in Initial Public Offerings. https://app.cochat.ai/papers/10.2307/2328547
- The paper
- Megginson, W. L., & Weiss, K. A. (1991). Venture Capitalist Certification in Initial Public Offerings. The Journal of Finance. https://doi.org/10.2307/2328547
Data sources
Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
