The Performance of Publicly Traded European Venture Capital Companies
The stock market return and the risk of 33 quoted European venture capital companies during the period 1977-1991 are studied. The return is negative on average with eight of the 33 companies having a return that is higher than the market return. However, the systematic risk (measured by the beta of the stock) is lower than the market risk. When taking the risk into account, no company has a return that is significantly higher than zero, but four companies have a return that is significantly lower than zero. When interpreting these results, one has to take into account that most shares of venture capital companies trade at a significant discount relative to their net asset value, indicating that the long-term return that investors can expect in the future, may be higher than in the past. Venture capital companies that are specialized in a specific investment stage have a higher return, while the regional companies have a lower return than general companies. The systematic risk of specialized companies is higher than that of general companies.
Volume (Year): 3 (1994)
Issue (Month): 2 (Spring)
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- Scholes, Myron & Williams, Joseph, 1977. "Estimating betas from nonsynchronous data," Journal of Financial Economics, Elsevier, vol. 5(3), pages 309-327, December.
- Fowler, David J. & Rorke, C. Harvey, 1983. "Risk measurement when shares are subject to infrequent trading : Comment," Journal of Financial Economics, Elsevier, vol. 12(2), pages 279-283, August.
- 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.
- Dimson, Elroy, 1979. "Risk measurement when shares are subject to infrequent trading," Journal of Financial Economics, Elsevier, vol. 7(2), pages 197-226, June.
- Brophy, David J. & Guthner, Mark W., 1988. "Publicly traded venture capital funds: implications for institutional "fund of funds" investors," Journal of Business Venturing, Elsevier, vol. 3(3), pages 187-206.
- Kleiman, Robert T. & Shulman, Joel M., 1992. "The risk-return attributes of publicly traded venture capital: Implications for investors and public policy," Journal of Business Venturing, Elsevier, vol. 7(3), pages 195-208, May.
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