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Venture capitalists, investment appraisal and accounting information: a comparative study of the US, UK, France, Belgium and Holland

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Author Info

  • Philippe Desbrières

    ()
    (Université de Bourgogne LATEC/FARGO)

  • Sophie Manigart
  • Koen De Waele
  • Mike Wright
  • Ken Robbie
  • Harry Sapienza
  • Amy Beekman

Abstract

The differences between the information used for the pre-investment valuation and the valuation methods used by venture capital investors in five countries (US, UK, France, Belgium and Holland) are empirically studied. The analysis is based on postal questionnaire surveys of representative samples of senior venture capitalists in each country. Differences are found, which may be attributed to the dominant corporate governance mechanism or the level of development of the venture capital market. Between-country differences persist even after taking into account between-country differences in the relative importance of investment stages and venture capital types. Apparently similar systems and venture capital markets place varying emphases on different valuation methods, with theoretically 'correct' methods not always being preferred in practice. The findings of the study highlight the need for venture capital firms entering non-domestic markets to invest considerable effort in understanding the operation of these markets if they are to exploit fully their perceived competitive advantages and minimize the likelihood of repeating the problems experienced by venture capital entrants into foreign markets in the late 1980s.

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Bibliographic Info

Paper provided by Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations in its series Working Papers CREGO with number 0991102.

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Length: 17 pages
Date of creation: Nov 1999
Date of revision:
Publication status: published in dans European Financial Management, vol.6, n°3, 2000, p.389-403 et dans Management Buy-outs and Venture Capital, Mike Wright et Ken Robbie (eds), Edward Elgar Publishing, 1999, p.238-262.
Handle: RePEc:dij:wpfarg:0991102

Note: article publié dans European Financial Management, vol.6, n°3, 2000, p.389-403 et dans Management Buy-outs and Venture Capital, Mike Wright et Ken Robbie (eds), Edward Elgar Publishing, 1999, p.238-262.
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Postal: Angèle Renaud, CREGO, 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
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Keywords: venture capital; investment appraisal; accounting information; corporate governance;

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  1. Ooghe, Hubert & Manigart, Sophie & Fassin, Yves, 1991. "Growth patterns of the European venture capital industry," Journal of Business Venturing, Elsevier, vol. 6(6), pages 381-404, November.
  2. Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5&6), pages 521-570.
  3. Roure, Juan B & Keeley, Robert H & van der Heyden, Tom, 1990. "European venture capital: Strategies and challenges in the 90s," European Management Journal, Elsevier, vol. 8(2), pages 243-252, June.
  4. Wright, Mike & Robbie, Ken & Ennew, Christine, 1997. "Venture capitalists and serial entrepreneurs," Journal of Business Venturing, Elsevier, vol. 12(3), pages 227-249, May.
  5. Moerland, Pieter W., 1995. "Alternative disciplinary mechanisms in different corporate systems," Journal of Economic Behavior & Organization, Elsevier, vol. 26(1), pages 17-34, January.
  6. Tyebjee, Tyzoon & Vickery, Lister, 1988. "Venture capital in Western Europe," Journal of Business Venturing, Elsevier, vol. 3(2), pages 123-136.
  7. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
  8. Sapienza, Harry J. & Manigart, Sophie & Vermeir, Wim, 1996. "Venture capitalist governance and value added in four countries," Journal of Business Venturing, Elsevier, vol. 11(6), pages 439-469, November.
  9. Robbie, K & Wright, M & Thompson, S, 1992. "Management buy-ins in the UK," Omega, Elsevier, vol. 20(4), pages 445-456, July.
  10. Bygrave, William D., 1988. "The structure of the investment networks of venture capital firms," Journal of Business Venturing, Elsevier, vol. 3(2), pages 137-157.
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