The Role of Private Equity When Portfolio Firms Go Public: Evidence from ChiNext Board

We probe into the question of why entrepreneurial firms choose to obtain private equity finance (PE) shortly before going public on the ChiNext Board (the Chinese alternative stock market for smaller firms, part of the Shenzhen Stock Exchange, SZSE). Using unique hand-collected data we find that, compared with non–PE-backed firms, firms with PE equity stakes introduced shortly before the IPO did not reduce IPO underpricing or decrease the...