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

28 Pages Posted: 7 Nov 2016

See all articles by Violetta Bacon‐Gerasymenko

Violetta Bacon‐Gerasymenko

Oregon State University

Russell Wayne Coff

Wisconsin School of Business

Rodolphe Durand

HEC Paris - Strategy & Business Policy

Date Written: December 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

Bacon‐Gerasymenko, Violetta and Coff, Russell Wayne and Durand, Rodolphe, Taking a Second Look in a Warped Crystal Ball: Explaining the Accuracy of Revised Forecasts (December 2016). Journal of Management Studies, Vol. 53, Issue 8, pp. 1292-1319, 2016, Available at SSRN: https://ssrn.com/abstract=2864702 or http://dx.doi.org/10.1111/joms.12207

Violetta Bacon‐Gerasymenko (Contact Author)

Oregon State University ( email )

Bexell Hall 200
Corvallis, OR 97331
United States

Russell Wayne Coff

Wisconsin 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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