Private equity-backed firms' performance post IPO : an empirical study of private equity- and venture capital funds' ability to facilitate abnormal returns at the Norwegian stock market
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We assess whether underpricing and long-long performance of Norwegian IPOs differs across private equity-backed and non-backed firms. Our sample consists of 67 backed firms and 298 non-backed firms, floated in the period from 1996 to 2010. We observe marginally lower underpricing of both smaller and larger backed IPOs, though statistically insignificant. We find that riskier issues exhibit higher underpricing, independent of firm size and private equity involvement. IPOs backed by private equity does not exhibit better long-run performance. On the contrary, both larger and smaller IPOs underperforms both relative to the OSEBX index and other IPOs, where especially larger IPOs exhibit severe underperformance in the five years following the public offering. While our full-sample regressions return insignificant negative excess alphas for backed relative to non-backed IPOs, time-varying rolling regressions display significant underperformance of private equity backed IPOs during both financial crises covered by our sample.