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Do Venture Capitalists Influence The Decision To Manage Earnings In Initial Public Offerings
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Book Synopsis Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings? by : Christine E.L. Tan
Download or read book Do Venture Capitalists Influence the Decision to Manage Earnings in Initial Public Offerings? written by Christine E.L. Tan and published by . This book was released on 2006 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior studies suggest that VCs play a monitoring role. We predict and find that IPO-year abnormal accruals are lower in the presence of VCs for a sample of 2630 IPO firms during 1983-2001. Our findings are robust to controls for the endogenous choice of VC financing. We consistently find that the VC effect holds even when controlling for IPO lock-up provisions, VC partial cashing out subsequent to the IPO, and alternative proxies for earnings management. In addition, our findings do not support the claims of critics that VCs inflated earnings during the internet IPO bubble. Finally, we provide some evidence that the lower earnings management associated with VC monitoring partially explains the superior post-IPO returns of VC-backed firms.
Book Synopsis Do Venture Capitalists Constrain or Encourage Earnings Management in Initial Public Offerings by : Suzanne G. Morsfield
Download or read book Do Venture Capitalists Constrain or Encourage Earnings Management in Initial Public Offerings written by Suzanne G. Morsfield and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether venture capitalists (VCs) provide value-added monitoring by constraining IPO-related earnings management in their portfolio firms. Finance theoretical literature is mixed as to its characterization of whether venture capitalists reduce principal-agent conflicts through their unique contracting, information collection, monitoring, and support skill/opportunity sets, or whether VCs have incentives to exploit their unique skills and proximity to firm management at the expense of other investors. Little empirical research has focused to date on identifying observable and measurable tests of specific elements of the perceived VC governance skills or incentives set on the actual market value of the firms in their investment portfolios. Earnings management around an IPO is a context where we may be able to both observe and quantify the impact of these perceived skills and incentives. Consistent with the current accounting theory of earnings management detection, we focus on a specific capital markets context where the use of inappropriate earnings-increasing discretionary accruals is expected - i.e., the initial public offering (IPO) setting. We find evidence that abnormal discretionary accruals are significantly lower and that long-run returns are significantly higher for VC-backed IPO firms relative to a matched sample of non-VC-backed IPO firms - these findings suggest that VCs behave more like principals than agents in this context. We also provide evidence that the direction of the discretionary accruals (i.e., income-increasing versus income-decreasing) is important when attempting to understand both the presence and determinants of earnings management in an IPO context. When positive and negative accruals are examined separately, VC presence is related to lower income-increasing discretionary accruals. We find no association between VC presence and income-decreasing accruals. Our results are robust to alternative variable specifications, and to controls for IPO market cycles and IPO lockup provisions.
Download or read book The IPO Decision written by Jason Draho and published by Edward Elgar Publishing. This book was released on 2004-01-01 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annotation Initial public offerings (IPOs) garnered unprecedented positive attention in the 1990s for their spectacular returns and central role in entrepreneurial activity. Subsequent revelations of unscrupulous IPO allocation and promotion practices cast a less fa.
Book Synopsis The Venture Capital Cycle by : Paul Alan Gompers
Download or read book The Venture Capital Cycle written by Paul Alan Gompers and published by MIT Press. This book was released on 2004 with total page 592 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the venture capital process, from fund-raising through investing to exiting investments; a new edition with major revisions and six new chapters that reflect the latest research.
Book Synopsis Institutional Affiliation and the Role of Venture Capital by : Yasushi Hamao
Download or read book Institutional Affiliation and the Role of Venture Capital written by Yasushi Hamao and published by . This book was released on 2000 with total page 114 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Initial Public Offerings, Subscription Precommitments and Venture Capital Participation by : Hans Jeppsson
Download or read book Initial Public Offerings, Subscription Precommitments and Venture Capital Participation written by Hans Jeppsson and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Past empirical research has shown that subscription precommitments by large blockholders can help certify firm value in new equity issues and influence the subscription decisions of small, relatively uninformed investors. This paper examines the role of insider participation by venture capitalists in initial public offerings and the association with price revisions during the bookbuilding period, the likelihood of completing the IPO and ownership retention in the post-IPO period. Using a hand-collected sample of 311 U.S. venture-backed firms going public during 2003-2016 and controlling for endogeneity in the choice to participate in the IPO, this study finds support for the certification role by venture capitalists during the IPO process. Insider participation in the S-1 filing is associated with smaller offer price revisions and positively associated with the offering being completed. A detailed analysis of ownership data in the post-IPO period documents that insider participation in the IPO is associated with a continuing role as shareholders in the years after going public, which is consistent with the certification hypothesis. This paper sheds new light on the role of venture capitalists in the IPO process.
Author :Georg Rindermann Publisher :Peter Lang Gmbh, Internationaler Verlag Der Wissenschaften ISBN 13 : Total Pages :226 pages Book Rating :4.F/5 ( download)
Book Synopsis Earnings Management and Reputation of Venture Capitalists by : Wei Luo
Download or read book Earnings Management and Reputation of Venture Capitalists written by Wei Luo and published by . This book was released on 2006 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate whether earnings management in venture-capital-backed IPO firms has any consequence on reputation of venture capitalists. I document that discretionary accruals in the IPO year are negatively related to the number of new IPOs backed by the same lead venture capitalist during the lockup period, the number of new IPOs during the first year after the lockup period, and the number of new IPOs during the second year after the lockup period. In addition, I find that if there is income-increasing earnings management in the IPO year, underpricing is greater for the new IPOs backed by the same lead venture capitalist in the first year after the expiration of lockup period. But there is no significantly positive relationship between the discretionary accruals in the IPO year and the underpricing of new IPOs backed by the same lead venture capitalist in the second year after the expiration of lockup period. Overall, I find some evidence that earnings management imposes costs on lead venture capitalists.
Book Synopsis Venture Capital and Initial Public Offering by : Weicheng Wang
Download or read book Venture Capital and Initial Public Offering written by Weicheng Wang and published by . This book was released on 2010 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings by : Elke J.E. Klaassen
Download or read book Earnings Growth and Underpricing with Venture Capitalist Backed Initial Public Offerings written by Elke J.E. Klaassen and published by . This book was released on 2007 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: The literature on the certification role of venture capitalists in initial public offerings (IPOs) is mixed and quite often no significant effect is found. Similarly, we find no significant effect of venture capitalists on IPO-underpricing in The Netherlands, if we study the impact of venture capitalists on all IPOs. However, underpricing is affected positively in venture capital backed companies that exhibit large net earnings growth and negatively in venture capital backed companies that exhibit small net earnings growth. The large underpricing of large net earnings growth companies suggests that informed insiders are not impressed by past net earnings of venture capital backed IPOs, but that past net earnings growth attracts less informed investors to bid fiercely for the shares after the IPO.
Book Synopsis Venture Capital and Private Equity Contracting by : Douglas J. Cumming
Download or read book Venture Capital and Private Equity Contracting written by Douglas J. Cumming and published by Academic Press. This book was released on 2013-08-21 with total page 781 pages. Available in PDF, EPUB and Kindle. Book excerpt: Other books present corporate finance approaches to the venture capital and private equity industry, but many key decisions require an understanding of the ways that law and economics work together. This revised and updated 2e offers broad perspectives and principles not found in other course books, enabling readers to deduce the economic implications of specific contract terms. This approach avoids the common pitfalls of implying that contractual terms apply equally to firms in any industry anywhere in the world. In the 2e, datasets from over 40 countries are used to analyze and consider limited partnership contracts, compensation agreements, and differences in the structure of limited partnership venture capital funds, corporate venture capital funds, and government venture capital funds. There is also an in-depth study of contracts between different types of venture capital funds and entrepreneurial firms, including security design, and detailed cash flow, control and veto rights. The implications of such contracts for value-added effort and for performance are examined with reference to data from an international perspective. With seven new or completely revised chapters covering a range of topics from Fund Size and Diseconomies of Scale to Fundraising and Regulation, this new edition will be essential for financial and legal students and researchers considering international venture capital and private equity. An analysis of the structure and governance features of venture capital contracts In-depth study of contracts between different types of venture capital funds and entrepreneurial firms Presents international datasets from over 40 countries around the world Additional references on a companion website Contains sample contracts, including limited partnership agreements, term sheets, shareholder agreements, and subscription agreements
Book Synopsis Does a Venture Capitalist Influence Auditor Going Concern Decisions? by : Geraldo Vasquez
Download or read book Does a Venture Capitalist Influence Auditor Going Concern Decisions? written by Geraldo Vasquez and published by . This book was released on 2017 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: A growing number of firms that go public (e.g., IPO) are financially distressed often for several years of their initial existence, raising concerns about their ability to remain going concerns. Yet many IPOs do not receive going concern opinions (GCO) from their auditors who are charged with providing an assessment of their clients' going concern status. A key feature of the IPOs is that a significant proportion of them are financed by venture capitalists (VCs). Unlike conventional sources of financing, such as banks, a VC offers financial as well as non-financial support to the new firm such as mentorship, strategic guidance and network access. The VC also provides monitoring as a member of the board of directors. An auditor's assessment of its client's going concern situation includes an audit of its financial statements and, if the client is financially distressed and in danger of ceasing to be a going concern, a review of factors that may mitigate the need for a GCO. I hypothesize that going concern opinions are assessed less often to financially distressed IPOs because the VC's presence is viewed by the auditor as a factor that mitigates the need for a GCO. Thus, I explore whether the presence of a VC - in contrast to the presence of a banker - tempers the likelihood of issuance of a GCO to a financially distressed firm. I also explore whether varying degrees of involvement by a VC serve to mitigate an auditor's need to issue a GCO since VCs are not all equally effective in their roles. I find support for hypothesis (H1) that going concern opinions are assessed less often to financially distressed IPOs with venture capital backing than to those with other forms of financial backing (e.g., banker financing) and no support for hypothesis (H2) that the negative association between the presence of a VC and the issuance of a going concern opinion to a financially distressed IPO is stronger the greater the involvement of a VC. This study will inform industry regulators, concerned with transparency and the adequacy of financial disclosures, determine whether financial disclosure requirements should be enhanced to account for the presence of a VC . This study will also assist institutional and individual investors understand the risk that a VC-backed IPO may fail even when a GCO was not issued by an auditor.
Book Synopsis The influence of venture capitalists on small capitalisation initial public offerings by : Petrus Ignatius Swanepoel
Download or read book The influence of venture capitalists on small capitalisation initial public offerings written by Petrus Ignatius Swanepoel and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Why Do Some Venture Capitalists Cash Out While Others Retain Their Stakes? -- How Fund Dynamics Influence Venture Capital Exit Decisions by : Maximilian Schmidt
Download or read book Why Do Some Venture Capitalists Cash Out While Others Retain Their Stakes? -- How Fund Dynamics Influence Venture Capital Exit Decisions written by Maximilian Schmidt and published by . This book was released on 2013 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although venture capital (VC) exits have been studied for over 20 years, major drivers are still in question. We examine the determinants of exit timing in initial public offerings (IPOs). The results from a proprietary dataset of 292 U.S. VC-backed IPOs from 1991 to 2008 imply that VC firm characteristics and fund dynamics have a significant influence on the exit extent and may not always be in line with limited partners' interests. In particular, first-time funds keep their shares longer after an IPO, whereas funds satisfied with current fund performance cash out soon after the end of the lockup period.
Book Synopsis Venture Capital Investors and Portfolio Firms by : Sophie Manigart
Download or read book Venture Capital Investors and Portfolio Firms written by Sophie Manigart and published by . This book was released on 2013 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Venture Capital Investors and Portfolio Firms venture capital firms are considered as investors in young growth-oriented companies. The authors focus on the later phases of the venture capital (VC) investment process. They therefore emphasize monitoring, value adding, and exiting activities. They also include a review of the literature on the outcome of venture capital investment activities. Research findings are drawn principally from refereed journal papers in entrepreneurship, finance, and management. The monograph is divided into six principal areas: 1.What venture capital firms do. 2.The impact of VCs on portfolio firms and other stakeholders. 3.The role of syndication. 4.The nature and timing of exit from VC investments. 5.The role of VCs in portfolio companies that undergo an initial public offering (IPO). 6.The returns from investing in VC. Venture Capital Investors and Portfolio Firms concludes with a detailed agenda for further research. To aid the reader who wishes to pursue particular papers in more detail, the authors provide a summary of the main papers in this literature in a set of tables where they identify the authors, publication date, the journal, the main research question, the theoretical perspective, data, and the principal findings.
Book Synopsis Incentives and Opportunities for Earnings Management in Initial Public Offerings by :
Download or read book Incentives and Opportunities for Earnings Management in Initial Public Offerings written by and published by . This book was released on 1994 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Oxford Handbook of Entrepreneurial Finance by : Douglas Cumming
Download or read book The Oxford Handbook of Entrepreneurial Finance written by Douglas Cumming and published by OUP USA. This book was released on 2012-03-22 with total page 937 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a comprehensive picture of issues dealing with different sources of entrepreneurial finance and different issues with financing entrepreneurs. The Handbook comprises contributions from 48 authors based in 12 different countries.
