Venture Capitalists, Investment Appraisal and Accounting Information: A Comparative Study of the Us, UK, France, Belgium and Holland

Posted: 4 Jul 2000

See all articles by Sophie Manigart

Sophie Manigart

Vlerick Business School; Ghent University

Mike Wright

Nottingham University Business School

Koen Waele

Ghent University

Ken Robbie

Nottingham University Business School

Philippe Desbrieres

Université de Bourgogne

Harry J. Sapienza

University of Minnesota - Twin Cities - Carlson School of Management

Amy Beekman

University of South Carolina - Darla Moore School of Business

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.

Key Words: Venture capital; Investment appraisal; Accounting information; Corporate governance

JEL Classification: G12, G24, G34

Suggested Citation

Manigart, Sophie and Wright, Mike and Waele, Koen and Robbie, Ken and Desbrieres, Philippe and Sapienza, Harry J. and Beekman, Amy, Venture Capitalists, Investment Appraisal and Accounting Information: A Comparative Study of the Us, UK, France, Belgium and Holland. European Financial Management, Vol. 6, No. 3 September 2000. Available at SSRN: https://ssrn.com/abstract=228799

Sophie Manigart

Vlerick Business School ( email )

Reep 1
Ghent, BE-9000
Belgium

Ghent University ( email )

Sint-Pietersplein 7
Gent, 9000
Belgium

Mike Wright (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom
+44 115 951 5257 (Phone)
+44 115 951 5204 (Fax)

Koen Waele

Ghent University

Faculteit Economie en Bedrijfskunde De Vlerick School voor Management
B-9000 Ghent
Belgium

Ken Robbie

Nottingham University Business School

Jubilee Campus
Wollaton Road Centre for Management Buy-out Research
Nottingham, NG8 1BB
United Kingdom

Philippe Desbrieres

Université de Bourgogne ( email )

Institut d'Administration des Entreprises
21066 Dijon Cedex
France

Harry J. Sapienza

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Amy Beekman

University of South Carolina - Darla Moore School of Business

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

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