Venture Capital and Capital Allocation

• 成果类型: Article
• 署名作者: Piacentino, Giorgia
• 署名单位: Columbia University; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12756
• 发表日期: 2019
• 页码: 1261-1314
• 关键词: Career concerns; Information production; INVESTMENT; certification; reputation; portfolio; feedback; MARKET

摘要

I show that venture capitalists' motivation to build reputation can have beneficial effects in the primary market, mitigating information frictions and helping firms go public. Because uninformed reputation-motivated venture capitalists want to appear informed, they are biased against backing firms-by not backing firms, they avoid taking low-value firms to market, which would ultimately reveal their lack of information. In equilibrium, reputation-motivated venture capitalists back relatively few bad firms, creating a certification effect that mitigates information frictions. However, they also back relatively few good firms, and thus, reputation motivation decreases welfare when good firms are abundant or profitable.