Venture capital and financial reporting in newly public firms

Lars Helge Hass, Monika Tarsalewska

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Financial intermediaries such as venture capitalists (VCs) not only provide financing, they also play an active role in firm governance and in financial practices before a firm goes public. Venture capitalists are actively engaged in monitoring and advising their portfolio firms. Thus, one also expects them to exert significant influence over the development of financial reporting practices. This chapter reviews recent literature and empirical evidence on VCs and financial reporting quality in newly public firms. It surveys the role of VCs in such activities as earnings management. In particular, it discusses how their monitoring activities and reputation can impact how their portfolio firms establish financial reporting practices. Subsequently, it also reviews the consequences of misreporting, and whether they affect VC behavior ex ante. Finally, the chapter uses recent data to provide empirical evidence on the effect of VCs on accrual and real earnings management.
Original languageEnglish
Title of host publicationThe Oxford Handbook of IPOs
EditorsDouglas Cumming, Sofia Johan
Place of PublicationOxford, UK
PublisherOxford University Press
Chapter15
Pages412-429
Number of pages18
ISBN (Print)9780190614577
DOIs
Publication statusPublished - 7 Feb 2019

Keywords

  • earnings management
  • financial reporting
  • portfolio
  • public firms
  • venture capital

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  • Cite this

    Hass, L. H., & Tarsalewska, M. (2019). Venture capital and financial reporting in newly public firms. In D. Cumming, & S. Johan (Eds.), The Oxford Handbook of IPOs (pp. 412-429). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780190614577.013.3