Can Venture Capital Time the Market

• Main Authors: Kuo, Ming-Che, 郭明哲
• Other Authors: Shao-Chi Chang
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/08275950173984388182

碩士 === 國立成功大學 === 國際企業研究所 === 89 === Owning to the participation of venture capital, some start-ups and entrepreneurs can afford abundant fund for new business. There are more than one hundred and fifty venture funds in Taiwan nowadays. Venture capitalists act as a mediator between fund suppliers and demanders. Moreover, venture capital provides certification function and reducing information asymmetry between issuing companies and public investors. Venture capitals do not intend to control the invested company forever. Instead, they focus on the investment revenues and capital gains. Depending upon the investment focus and strategy of the venture firm, they will seek to exit the investment in the portfolio company within three to five years of the initial investment. That’s to say that the IPO timing of invested company will affect the investment performance of venture capital. The results list below. 1.Venture-backed firms engaged IPO, before IPO date, the mean “buy-and-hold” return of TSE Stock Index are significantly greater than Non-VC-backed firms. However, after IPO date, the mean “buy-and-hold” return of TSE Stock Index makes no significantly difference between VC and Non-VC-backed firms. Overall, Venture capital participation isn’t able to time the IPO of listing companies. 2.After venture capitalists'' investment, the operating performance of portfolio companies doesn''t improve significantly. However, High-ownership firms reveal better operating performance than low-ownership firms after IPO. 3.After IPO, the long-term stock return makes no significant difference between VC-backed and Non-VC backed firms. However, Experienced VC-backed firms have significant higher return than less-experienced VC-backed firms. And high ownership VC-backed firms have significant superior return than low- ownership firms.