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Fair Value Disclosure of the Publicly Traded Venture Capital Industry

49 Pages Posted: 20 Jul 2012  

Keren Bar-Hava

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Chana Esther Hertz

affiliation not provided to SSRN

Date Written: July 19, 2012

Abstract

We examine accounting standard ASR 118 mandating the reporting of fair values of investment securities. Using a unique setting, the USA public venture capital (VC) industry, we test whether ASR 118 would be important to investors, or whether relevance would come at the expense of reliability. We examine the relevance and reliability of manager-reported fair value estimates and find that fair value estimates do provide relevant information incremental to historical cost as evidenced by its effect on share value. Moreover, we find that fair value estimates are reliable, based on comparing fair value estimates provided during the last year before the exit to actual cash realized exit price.

Keywords: IFRS, Venture Capital

JEL Classification: M41, G24, M44

Suggested Citation

Bar-Hava, Keren and Hertz, Chana Esther, Fair Value Disclosure of the Publicly Traded Venture Capital Industry (July 19, 2012). Available at SSRN: https://ssrn.com/abstract=2113114 or http://dx.doi.org/10.2139/ssrn.2113114

Keren Bar-Hava (Contact Author)

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Jerusalem
Israel

Chana Esther Hertz

affiliation not provided to SSRN

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