Article

The Impact of Venture Capital on the Long-Term Performance of IPO Firms: Evidence from Korea

Jaeho Lee

in The Oxford Handbook of Venture Capital

Published in print April 2012 | ISBN: 9780195391596
Published online September 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195391596.013.0026

Series: Oxford Handbooks

 The Impact of Venture Capital on the Long-Term Performance of IPO Firms: Evidence from Korea

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This article investigates the performance of initial public offerings (IPOs) in Korea during the rapidly changing dot-com bubble-and-bust period (1999–2001). Specifically, it analyzes the impact on long-term performance of the extent of venture capital involvement in the IPO, and of the ownership characteristics of the venture capital companies themselves, in 372 firms that went public during the period 1999–2001 in KOSDAQ. The study measures VC participation in terms of pre-IPO share ownership by VC firms and attempts to differentiate IPO impacts between VCs grouped in terms of their reputation (measured by their dominance of the VC market) and their affiliation with financial institutions (in terms of ownership of VCs by banks and security companies). The article is organized as follows. It first provides an institutional description of the venture capital industry in Korea in comparison with the U.S. and U.K. industries. After reviewing the related literature, it describes the data set and document the methodology used. It then discusses the main characteristics of the IPO samples and reports the univariate and multivariate analysis on long-term performance.

Keywords: initial public offerings; Korean firms; dot-com bubble-and-bust period; ownership; KOSDAQ; venture capital industry

Article.  12633 words. 

Subjects: Economics ; Financial Markets

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