The Relevance of Financial versus Non-Financial Information for the Valuation of Venture Capital-Backed Firms

Sievers, Soenke; Mokwa, Christopher Frederik; Keienburg, Georg

doi:10.1080/09638180.2012.741051

Cited by 54 publications

(24 citation statements)

References 78 publications

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“…The method of constructing case materials from financial data of a real company has been applied in previous studies (e.g., Sedor, ). Choosing a company from the software industry is justified by the high relevance of nonfinancial information for valuation in this industry (Sievers, Mokwa and Keienburg, ).…”

Section: Experimental Designmentioning

confidence: 99%

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

Becker

Medjedovic

Merkle

2019

The Financial Review

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In an experiment with professional analysts, we study their reliance on CEO personality information when producing financial forecasts. Drawing on social cognition research, we suggest analysts apply a stereotyping heuristic, believing that extraverted CEOs are more successful. The between‐subjects results with CEO extraversion as treatment variable confirm that analysts issue more favorable forecasts (earnings per share, long‐term earnings growth, and target price) for firms led by extraverted CEOs. Increased forecast uncertainty leads to even stronger stereotyping. Additionally, personality similarity between analysts and CEOs has a large effect on financial forecasts. Analysts issue more positive forecasts for CEOs similar to themselves.

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Section: Experimental Designmentioning

confidence: 99%

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

Becker

Medjedovic

Merkle

2019

The Financial Review

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“…The average firm has $0.26 of sales per dollar of requested valuation. The price‐to‐sales ratio of approximately 4 is lower than Sievers, Mokwa, and Keienburg (), who report multiples as high as 13. Presumably, this lower valuation reflects the mix of high growth and established businesses that appear on the show.…”

Section: Data Collection and Summary Statisticsmentioning

confidence: 59%

Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

Boulton¹,

Shohfi

Zhu

2018

Journal of Small Business Management

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We use actual negotiations between angel investors and entrepreneurs to study the impact of personal characteristics on investment outcomes. We construct a unique data set with 707 investment requests led by 1,089 entrepreneurs and find that the personal characteristics of the entrepreneur, including gender, race, and age, are correlated with requested valuations, the likelihood that an offer is received, and the implied valuation when an angel investor extends an offer. Shared personal characteristics between entrepreneurs and investors also affect the likelihood that an investor makes an offer, the entrepreneur accepts an offer, and the implied valuation when an offer is extended.

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“…Important contributions by Hand (2005), Armstrong et al (2006) and Sievers et al (2013) document the significant role of financial statement information in earlystage equity markets. When we compare the investment strategy of high and low debt startups at the year of founding, we detect significant differences in the asset composition across time in the following two years.…”

Section: Discussionmentioning

confidence: 99%

“…Armstrong et al (2006) study how financial statement information can be used to explain pre-IPO differences in firms' equity valuations. Sievers et al (2013) document that financial and non-financial information are complementary and jointly explain around 62% of the variation in pre-money valuations.…”

Section: Outside Equity In Start-up Firmsmentioning

confidence: 99%

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Information Asymmetry Reduction in Opaque Contexts: Evidence From Debt and Outside Equity Financing in Early Stage Firms

Epure

Guasch

2016

SSRN Journal

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This study analyzes the relationship between debt and outside equity investments in early stage firms. The existing evidence on this relationship is scarce and inconclusive, mostly due to the pervasive opaqueness of new ventures. We argue that debt and its usage can be valuable signals for outside investors facing severe information asymmetries. In addition, we examine how personal and business debt could signal different information to outside investors. Using panel data on new ventures in the US from the Kauffman Firm Survey, we find evidence consistent with our arguments. We reveal that debt, and particularly business debt, is positively related to outside equity investments, especially in times of economic distress. We posit that start-ups with higher levels of business debt can send more credible signals to capital markets, and identify cash holdings and the firm-bank relationship as possible information channels for outside investors.

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The Relevance of Financial versus Non-Financial Information for the Valuation of Venture Capital-Backed Firms

Cited by 54 publications

References 78 publications

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

Information Asymmetry Reduction in Opaque Contexts: Evidence From Debt and Outside Equity Financing in Early Stage Firms

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