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Venture Capital Investor Behaviour in the Backing of UK High Technology Firms: Financial Reporting and the Level of Investment

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Author Info
Gavin C. Reid
Julia A. Smith

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Abstract

This paper is an empirical investigation into the ways in which venture capitalists value (and invest in) high technology firms, focusing on financial reporting, risk disclosure and intangible assets. It is based on questionnaire returns from UK investors in diverse sectors, ranging from biotechnology, through software/ computer services, to communications and medical services. This evidence is used to examine: (a) the usefulness of financial accounts; (b) the implications of technopole investment; (c) the extent of investor control over the investee’s AIS; and (d) the role of investor opinion (e.g. on disclosure, due diligence and risk reporting) in determining the level of equity provision.

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Publisher Info
Paper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 0510.

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Date of creation: Jun 2005
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Handle: RePEc:san:crieff:0510

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Related research
Keywords: venture capital; high technology; accounting information; intangible assets;

Find related papers by JEL classification:
D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
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  5. Annita Florou, 2005. ""Discussion of" Performance of Private to Public MBOs: The Role of Venture Capital," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 32(3-4), pages 683-690. [Downloadable!] (restricted)
  6. Kothavala, Kazbi, 2003. "Proportional consolidation versus the equity method: A risk measurement perspective on reporting interests in joint ventures," Journal of Accounting and Public Policy, Elsevier, vol. 22(6), pages 517-538. [Downloadable!] (restricted)
  7. Ellen Engel, 2002. "The Roles of Performance Measures and Monitoring in Annual Governance Decisions in Entrepreneurial Firms," Journal of Accounting Research, Blackwell Publishing, vol. 40(2), pages 485-518, 05. [Downloadable!] (restricted)
  8. Mike Wright, 1998. "Venture Capital and Private Equity: A Review and Synthesis," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 25(5&6), pages 521-570. [Downloadable!] (restricted)
  9. Bharat A. Jain & Omesh Kini, 2000. "Does the Presence of Venture Capitalists Improve the Survival Profile of IPO Firms?," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 27(9&10), pages 1139-1183. [Downloadable!] (restricted)
  10. Ranko Jelic & Brahim Saadouni & Mike Wright, 2005. "Performance of Private to Public MBOs: The Role of Venture Capital," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 32(3-4), pages 643-682. [Downloadable!] (restricted)
  11. Ruhnka, John C. & Young, John E., 1991. "Some hypotheses about risk in venture capital investing," Journal of Business Venturing, Elsevier, vol. 6(2), pages 115-133, March. [Downloadable!] (restricted)
  12. Richard J. Barkham & Charles W. R. Ward, 1999. "Investor Sentiment and Noise Traders: Discount to Net Asset Value in Listed Property Companies in the U.K," Journal of Real Estate Research, American Real Estate Society, vol. 18(2), pages 291-312. [Downloadable!]
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