The impact of venture capital on IPO underpricing - empirical evidence based on A-Share listed companies in China

This study aims to reveal the impact mechanism of venture capital on IPO underpricing in the Chinese A-share market. Using data from 1990-2023 and conducting an ordinary least squares (OLS) regression model, the study finds that venture capital significantly exacerbated IPO underpricing. Further analysis shows that institutional ownership, underwriter reputation, and sponsor reputation could mitigate the amplifying effect. In addition, heterogeneity analysis shows that venture capital has a more significant impact on IPO underpricing in non-state-owned, non-manufacturing, main board, and non-eastern region companies. These findings provide a new perspective for understanding the pricing dynamics of IPOs in the Chinese stock market, as well as guidance for investor behavior and the healthy development of the stock market.