@article {Hsu95, author = {Junming Hsu and Chia-Yu Chang}, title = {An Investment Strategy Based on the Long-Run Performance of IPOs: Venture-Backed and Non-Venture-Backed Firms }, volume = {17}, number = {4}, pages = {95--105}, year = {2008}, doi = {10.3905/JOI.2008.17.4.095}, publisher = {Institutional Investor Journals Umbrella}, abstract = {This study investigates the evolution and long-run performance of venture-backed and non-venture-backed firms after the initial public offerings (IPOs). We hypothesize that the entrepreneurial ability enables venture-backed firms to keep a good performance in the long run. The results show that firms underperform the market over the five years following the IPOs, with venture-backed firms outperforming non-venture-backed firms. About six years after the IPOs, however, firms still alive outperform the market, with venture-backed firms showing superior performance. We also find that venture-backed firms with glamour performance from year 2 to year 5 after the IPOs tend to maintain good performance from year 6 to year 9. This result supports our hypothesis that the entrepreneurial ability of venture-backed firms lasts for a long period. Putting these results together, we suggest that holding a portfolio consisting of glamour venture-backed stocks listing for about six years is a profitable strategy.TOPICS: Performance measurement, portfolio construction, statistical methods}, issn = {1068-0896}, URL = {https://joi.pm-research.com/content/17/4/95}, eprint = {https://joi.pm-research.com/content/17/4/95.full.pdf}, journal = {The Journal of Investing} }