Abstract: “This paper examines insider buying in IPOs and the association with IPO underpricing and price revisions. We find that insider participation is unassociated with IPO underpricing, but when disentangling venture capitalists and corporate partners, the latter is associated with lower IPO underpricing. On the contrary, venture capitalist participation is negatively associated with price revisions and remains robust when examining changes in venture capitalist participation in the bookbuilding period. This paper sheds light on the role of venture capitalists and corporate partners in the initial public offering process and contrasts past research considering IPOs as exit events”

Keywords: Initial public offering (IPO); Insider buying; Venture capital; Corporate partners; Certification; Underpricing; Price revision