Reducing information frictions in venture capital: The role of new venture competitions

• 成果类型: Article
• 署名作者: Howell, Sabrina T.
• 署名单位: New York University; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.10.009
• 发表日期: 2020
• 页码: 676-694
• 关键词: venture capital; entrepreneurship; information asymmetry; New venture competitions

摘要

Venture capital, an important source of financing for potentially high-growth new businesses, is believed to suffer from information frictions. This paper quantifies the magnitude of these frictions among participants in new venture competitions. In a regression discontinuity design with data from 87 competitions, winning a round increases the chances of external financing by about 35%. Winning is most impactful for ventures that are ranked just above the cutoff but receive no cash prize, and judge ranks strongly predict venture success. The results indicate that these information problems in new venture finance are large, and competitions can help resolve them through certification. (C) 2019 Elsevier B.V. All rights reserved.