Taking a Second Look in a Warped Crystal Ball: Explaining the Accuracy of Revised Forecast

Journal of Management Studies, May 6, 2016

HEC Paris Research Paper No. SPE-2016-1167

45 Pages Posted: 2 Sep 2016

See all articles by Violetta Gerasymenko

Violetta Gerasymenko

HEC Paris

Russell Wayne Coff

University of Wisconsin - Madison - School of Business

Rodolphe Durand

HEC Paris - Strategy & Business Policy

Date Written: May 6, 2016

Abstract

The fundamental questions we address are whether firms with a higher initial forecasting ability are able to accurately revise the exit forecasts of their investments; and how co-investment partners and value-adding commitment with their investment influence the main effect. We explore these questions with novel and unique data collected via mixed research methods on venture capital firms’ forecasts of 114 portfolio companies. We find that venture capital firms that are better at making initial forecasts are less effective in revising their forecasts. In addition, while the number of co-investment partners positively moderate this relationship, venture capital firms’ value-adding commitment moderates it negatively. Our findings contribute to the literature on organizational forecasting as well as inter-organizational knowledge transfer and knowledge creation. They also provide novel insights into venture capital literature and practice.

Keywords: forecasting, syndication, value-adding commitment, venture capital

Suggested Citation

Gerasymenko, Violetta and Coff, Russell Wayne and Durand, Rodolphe, Taking a Second Look in a Warped Crystal Ball: Explaining the Accuracy of Revised Forecast (May 6, 2016). Journal of Management Studies, May 6, 2016; HEC Paris Research Paper No. SPE-2016-1167. Available at SSRN: https://ssrn.com/abstract=2833231 or http://dx.doi.org/10.2139/ssrn.2833231

Violetta Gerasymenko (Contact Author)

HEC Paris ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

Russell Wayne Coff

University of Wisconsin - Madison - School of Business ( email )

975 University Avenue
Madison, WI 53706
United States

Rodolphe Durand

HEC Paris - Strategy & Business Policy ( email )

Jouy-en-Josas Cedex, 78351
France

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