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Public Market Information and Venture Capital Investment

Published online by Cambridge University Press:  04 March 2022

Brian Gibbons Open the ORCID record for Brian Gibbons [Opens in a new window]
Brian Gibbons*
Affiliation:
Oregon State University College of Business
*
brian.gibbons@oregonstate.edu (corresponding author)
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Abstract

I study venture capital firms’ (VCs) use of public market information and how attention to this information relates to private market investment outcomes. I link web traffic to public filings hosted on EDGAR to individual VCs. VCs analyze public information about industry peers before most deals. An increase in industry filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information, especially for low-reputation VCs. Policymakers should consider spillover effects on private markets when setting public disclosure requirements.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 58 , Issue 2 , March 2023 , pp. 746 - 776
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

I thank Boone Bowles (the referee), Jennifer Conrad (the editor), Jess Cornaggia, Kimberly Cornaggia, Daniel Garrett, Matthew Gustafson, Peter Iliev, Nadya Malenko, Vesa Pursiainen, Timothy Simin, Jonathan Zandberg, and seminar participants at Pennsylvania State University for their valuable comments. I would like to acknowledge that I completed a substantial portion of this work as part of my doctoral dissertation at the Pennsylvania State University.

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