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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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Listed:
  • 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.

Suggested Citation

  • Philippe Desbrières & Sophie Manigart & Koen De Waele & Mike Wright & Ken Robbie & Harry Sapienza & Amy Beekman, 1999. "Venture capitalists, investment appraisal and accounting information: a comparative study of the US, UK, France, Belgium and Holland," Working Papers CREGO 0991102, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
  • 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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    References listed on IDEAS

    as
    1. Moerland, Pieter W., 1995. "Alternative disciplinary mechanisms in different corporate systems," Journal of Economic Behavior & Organization, Elsevier, vol. 26(1), pages 17-34, January.
    2. Ken Robbie & Mike Wright & Brian Chiplin, 1997. "The Monitoring of Venture Capital Firms," Entrepreneurship Theory and Practice, , vol. 21(4), pages 9-28, July.
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    4. 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.
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    More about this item

    Keywords

    venture capital; investment appraisal; accounting information; corporate governance;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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