Venture capital-backed and commitments test entity initial public offerings on the ASX

Zoltan Murgulov, Alastair Marsden, S. Ghon Rhee, Madhu Veeraraghavan

Research output: Contribution to journalArticleResearchpeer-review

3 Citations (Scopus)


This paper examines initial returns to venture capital (VC) backed and non-VC-backed IPO companies on the Australian Securities Exchange (ASX). We find support for the theoretical predictions of Rossetto (2008), by providing empirical evidence that VC-backed CTE IPOs exhibit greater wealth losses to pre-IPO investors compared to non-VC-backed CTE IPOs during hot issue markets. We also find that greater retained ownership increases IPO underpricing. In the subsample of IPOs with below the median level of retained ownership IPOs, VC-backed CTE IPOs and VC-backed, non-CTE IPOs have significantly higher levels of underpricing and wealth loss compared to non-VC-backed, non-CTE IPOs.

Original languageEnglish
Pages (from-to)1265-1297
Number of pages33
JournalAccounting & Finance
Issue number2
Publication statusPublished - Jun 2019


  • Commitments test entity
  • Initial public offerings
  • Underpricing: Wealth losses
  • Venture capital

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