CRIEFF Discussion Paper Number 0510
Venture Capital
Investor Behaviour in the Backing of UK High
Technology Firms: Financial Reporting and the Level of Investment.
Gavin C. Reid (University of St. Andrews) and Julia A. Smith (Cardiff
Business School)
Abstract
This paper is an empirical investigation into the ways
in which venture capitalists value (and invest in) high technology firms,
focusing on financial reporting, risk disclosure and intangible assets. It is based on questionnaire returns from UK
investors in diverse sectors, ranging from biotechnology, through software/
computer services, to communications and medical services. This evidence is used to examine: (a) the
usefulness of financial accounts; (b) the implications of technopole
investment; (c) the extent of investor control over the investee’s
AIS; and (d) the role of investor opinion (e.g. on disclosure, due diligence
and risk reporting) in determining the level of equity provision.
JEL Classifications
D81, D82, G24, G32, M13, M41, O31
Keywords
venture capital, high technology, accounting information, intangible assets
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