THE CERTIFYING ROLE OF PRIVATE EQUITY AND VENTURE CAPITAL FUNDS IN THE QUALITY OF COMPANIES NEWCOMERS ON BM&FBOVESPA
DOI:
https://doi.org/10.17524/repec.v8i3.1034Keywords:
Investments, Private equity, Venture capital, Bovespa, Initial public offering.Abstract
This study verified, from the perspective of the signaling theory, the certifying role of Private Equity and Venture Capital funds in the quality of companies that are newcomers on BM&FBovespa (IPOs). Therefore, an event study was proposed to verify the existence of cumulative abnormal returns (proxy for IPO quality) in investments portfolios of stocks from the IPOs launched on BM&FBovespa between January 2004 and December 2007. The research hypotheses were verified by means of three distinct procedures: test of means, CAPM and CAR regressions. It was verified that companies that received contributions from Private Equity and Venture Capital showed statistically higher mean cumulative abnormal returns than companies without investments. The regression results indicate that, the greater the participation of PE/VC funds, the better the IPOs’ long-term performance. The evidence found suggest that the presence of PE/VC funds in the companies that were newcomers on BM&FBovespa has a positive effect on the cumulative abnormal returns of the IPOs.References
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