The certification role of venture capitalists, top underwriters and big-n auditors in ipos

• Autor(a) principal: Sampaio, Joelson Oliveira
• Data de Publicação: 2015
• Tipo de documento: Tese
• Idioma: eng
• Título da fonte: Repositório Institucional do FGV (FGV Repositório Digital)
• Texto Completo: http://hdl.handle.net/10438/13583
• topic: Earnings management; Certification; Venture capital; Gerenciamento de resultados; Certificação; Administração de empresas; Oferta pública inicial de títulos (Finanças); Capital de risco; Investimentos; Sociedades comerciais - Finanças

This thesis seeks to evaluate the impact of the recurring main actors during the IPO process, in particular the Venture Capitalist, the underwriter, and the auditor, have a lasting effect on the firm’s marketability, captured by the bid-ask spread, the fraction of institutional investors that invest in the company, the equity dispersion, among others. Furthermore, this study also analyzes some benefits that venture capitalists (VCs) provide to the companies in which they invest. It investigates the role of VCs in hampering earnings management in IPOs and it quantifies the role VCs play in the operational performance of newly public firms after their IPO. In the first chapter the results indicate that earning inflation occurs in the Pre-IPO and IPO periods. When we control for the four different periods of the IPO, we observe that venture-backed IPOs present significantly less earnings management in the IPO and Luck-up periods, exactly when firms inflate earnings. This result is robust across statistical methods and different methodologies used to estimate earnings management. Furthermore, by splitting the sample between venture and non-venture backed IPOs, we observe that both groups manage earnings. VC-backed and non-VC-backed subsamples present EM more intensively in different phases around the IPO. Finally, we also observe that top underwriter backed engage in less EM in VC-backed subsample. In the second chapter, it was found that the choice of auditor, venture capitalist, and underwriter may indicate the firm’s long-run choices. We presented evidence that the characteristics of the underwriter, auditor, and VC have an impact on the firms’ characteristics and market performance. Furthermore, these effects are last for almost a decade. Firms that have a top underwriter and a big N-auditor at the time of the IPO have a higher marketability for the next 8 years, represented by a higher number of analysts following, a large dispersion of ownership across institutional investors, and higher liquidity through a lower bid-ask spread. They are also less likely to end up delisted as well as more likely to issue an SEO. Finally, VC-sponsorship positively affects all the measures for market liquidity, since the IPO and for up to almost a decade. Such effects are not due to survivorship bias.These results do not depend on the dot-com bubble, i.e., our findings are qualitatively the same once we exclude the bubble period of 1999 – 2000. In the latter chapter has been shown that VC-backing firms incur in a higher level of cash holdings than non-VC-backed firms. This effect is permanent last for at least 8 years after the IPO. We also show that VC-backed firms are associated with a lower level of leverage and interest coverage over the first 8 years after the IPO. Finally, we do not have evidence statiscally significant between VC and dividend to earnings ratio. These results are robusts across statistical methods and different methodologies.