Theses and Dissertations

Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Dr. Diego Escobari

Second Advisor

Dr. Alberto Davila

Third Advisor

Dr. Yu Liu


This dissertation includes three separate essays related to venture capital backed firms and peer to peer lending. The first essay, presented in Chapter II, studies underpricing and buy and hold abnormal returns in venture capital backed firms.

In this chapter, I conduct an analysis of underpricing and buy-and-hold abnormal returns in venture capitals' portfolio of firms using a sample of 991 venture backed IPOs between 1985 and 2018. I show that the more experienced the venture capital is, the larger the underpricing and the lower the buy-and-hold returns of the whole portfolio. Venture capital investors underprice significantly their portfolio of IPOs no matter if it is their first or latter IPO. Furthermore, the more diversified the portfolio of firms the venture capital is holding, the higher the overall underpricing of the venture capital overall portfolio. Additionally, while higher investment proportions in high-tech firms are significantly related to higher underpricing of the overall portfolio, higher investment proportions in health care firms are significantly related to lower underpricing. The results overall complement prior findings to support the grandstanding and spinning hypotheses suggested by Gompers (1996) and Loughran and Ritter (2004), respectively.

For the second essay, presented in Chapter III, I study the underpricing and buy and hold abnormal returns of IPO firms in concentrated vs. non-concentrated industries. My main research questions are, (i) Do IPOs by VC backed firms experience more underpricing in more competitive (crowded) industries? (ii) Do VC backed firms suffer lower returns in more competitive industries?

I find evidence that industry concentration plays a significant role in the underpricing and returns of IPO firms. Although firms in more concentrated industries have lower underpricing and higher returns, the concentration of the overall industry, as measured by the HH-Index, reduces underpricing. The results further show that VC-backed firms have higher average underpricing and perform better in more concentrated industries. The findings are robust and the effects are consistent and persist regardless of the industry classification standard employed.

For the third essay, presented in Chapter IV, I investigate interest rates in Peer-to-Peer (P2P) lending where loans are separated into differentiated groups based on borrowers' risk level. I employ a mixture approach to model the existence of information asymmetry between borrowers and lenders in P2P lending businesses. The mixture approach allows for the identification of differentiated borrowers under incomplete information. I find that 31% of borrowers in the sample belong to the low risk group (A) and pay about 3% lower rate than those who belong to group B. Borrowers’ job position, work experience, and home ownership are strong determinants of risk level.


Copyright 2019 Abdelhamid Riani. All Rights Reserved.