Venture capital and post-IPO company performance: Evidence in Malaysia

Nas'Asshraf, Naina Mohamad (2013) Venture capital and post-IPO company performance: Evidence in Malaysia. Masters thesis, Universiti Utara Malaysia.

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Abstract

This study examines post IPO company performance of venture capital-backed and nonventure capital-backed companies for IPOs listed on the MAIN and ACE markets during the years 2006 to 2009. This study also examines the effect of venture capital variables and other control variables on post-IPO company performance. Out of 103 companies listed during the years 2006-2009, only 77 companies were selected as the sample for this study. Moreover, only 15 IPOs are backed by venture capital while the remaining 62 IPOs are non-venture backed. The descriptive statistics show that in the post-IPO period, the performance of venture-backed companies does not exhibit better performance compared to non-venture backed companies. This result contradicts the prior literature that states that venturebacked IPOs do outperform non-venture backed IPOs. Moreover, the long run post-IPO company performance shows a significant decline relative to the pre-IPO period. In addition, the venture capital age and company size are positively correlated with the post-IPO company performance. Meanwhile, venture capital dummy, percentage change in venture capital ownership, company age and market capitalization show a negative correlation with the post-IPO company performance for MAIN and ACE markets in Malaysia.

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