Do Private Equity Investors Create Value for Italian Initial Public Offerings?

International Review of Finance, Forthcoming

Posted: 16 Jul 2011

See all articles by Antonio Meles

Antonio Meles

Second University of Naples (SUN)

Date Written: July, 16 2011

Abstract

This study analyses the role of private equity backing in initial public offerings (IPOs) using a dataset of 227 companies that went public on the Milan Stock Exchange between January 1995 and December 2007. The evidence rejects the certification and monitoring hypotheses and provides considerable support for the market power hypothesis. In accordance with Chemmanur and Loutskina (2006), we suggest that private equity investors exploit their relationships with the key IPO market players to attract attention to the IPOs of firms backed by private equity, thus obtaining a higher equity valuation (both in the IPO and in the secondary market).

Keywords: IPO valuation; venture capital; private equity

JEL Classification: G23, G24, G32, G34

Suggested Citation

Meles, Antonio, Do Private Equity Investors Create Value for Italian Initial Public Offerings? (July, 16 2011). International Review of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1887104

Antonio Meles (Contact Author)

Second University of Naples (SUN) ( email )

Corso Gran Priorato di Malta, 2
Caserta, 8103
Italy

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