Do Venture Capital Investors Learn from Public Markets?

• 成果类型: Article
• 署名作者: Liu, Bibo; Tian, Xuan
• 署名单位: Tsinghua University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4201
• 发表日期: 2022
• 页码: 7274-7297
• 关键词: Learning; venture capital; staging; syndication; Price informativeness

摘要

We examine whether venture capital (VC) investors learn information contained in public market stock prices. VCs are less likely to stage finance startups and syndicate with other VCs when stock prices are more informative. An instrumental variable approach suggests that the relation is likely causal. The startup's initial public offering (IPO) prospect is the plausible information contained in stock prices learned by VCs. The effect of VC learning on staging and syndication is more pronounced when collecting information is more costly and the information learned is more reliable. Evidence from a survey of VC investors confirms that they actively learn information from the public market. VCs' learning from the public market significantly affects their investments across startup firms. Our paper sheds new light on the real effects of financial markets and suggests that the informational role of security prices is much broader than what we have thought.