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Public Market Information and Venture Capital Investment

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Public Market Information and Venture Capital Investment

Brian Gibbons "Journal of Financial and Quantitative Analysis" Journal of Financial and Quantitative Analysis 31 pages 2022

https://www.cambridge.org/core/journals/journal-of-financial-and-quantitative-a… Cite this Publication
Journal Details

Journal of Financial and Quantitative Analysis, 2022 Vol. 58 Issue 2 Pages 746 - 776

Keywords
Finance
Journal Article, Academic Journal

Overview

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.

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