Signalling and Excess Returns from Venture Capital Backed Flotations

Abstract

This paper examines the UK Venture Capital market with particular focus on the experiences of venture capitalist backed flotations. Management buy outs are focused upon, in particular to attempt to determine if recent evidence of superior returns to investing in MBO backed floatations is evidenced by their share price performance in the immediate after market. No such evidence is found in the study conducted but evidence points to a strong 'signalling' effect given by the involvement of venture capitalists in corporate flotations.