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Venture Capital Backing and Issuance of Seasoned Equity Offerings: Evidence from China *
Author(s) -
Yang Songling,
Li Hemei,
Li Juncheng,
Zhang Qiuyue,
Shi Qianqian
Publication year - 2020
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12318
Subject(s) - venture capital , business , information asymmetry , china , equity (law) , finance , financial system , monetary economics , economics , political science , law
We analyze how venture capital (VC) affects the timing of seasoned equity offering (SEO) issuance and the post‐SEO performance of Chinese companies during the 2006–2018 period. Empirical analysis confirms that VC “accelerates” SEO issuance because of greater financing demands. Thus, VC‐backed firms prefer to issue their first SEOs earlier than non‐VC‐backed firms. Moreover, quick SEOs promoted by venture capitalists are more underpriced because of information asymmetry.