The reputation effect of venture capital

Pei Gi Shu*, Yin-Hua Yeh, Shean Bii Chiu, Fu Sheng Ho

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


The main purpose of this paper to examine how the reputation effect of venture capital (VC) is associated with the initial return and ex-post performance of its invested IPO firms. In this paper, we use 267 Taiwanese IPO firms in 1994-2007 periods and find that VC-backed firms outperform non-VC-backed firms in terms of ex-post equity market-to-book ratio, ROA and R&D expenditure ratio. For those VC-backed IPOs, reputable VC-backed firms outperform mediocre VC-backed ones. Moreover, among the four proxies of VC reputation, the market share with respect to total IPO proceeds is most promising in explaining IPO firms' ex-post performance. The overall result confirms the reputation effect associated with VC.

Original languageEnglish
Pages (from-to)533-554
Number of pages22
JournalReview of Quantitative Finance and Accounting
Issue number4
StatePublished - 1 May 2011


  • Initial public offerings
  • Reputation effect
  • Venture capital

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