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==File(s)==
*[[Media:Brander_Egan_(2007)_-_The_Role_of_VCs_in_Acquisitions.doc | Brander Egan (2007) - The Role of VCs in Acquisitions (Working Paper)]]
==Keywords==
Acquisitions, Venture Capital, Information Technology, Information Asymmetry
==Abstract==
We study the effect of venture capital on returns to acquisitions of privately-held enterprises. One hypothesis is that venture capital provides “certification” of acquisition target quality under asymmetric information and therefore yields higher acquisition prices. An alternative “bargaining” hypothesis is that venture capitalists obtain higher acquisition prices through superior bargaining. An event study of U.S. acquisitions in the 1980-2006 period indicates that venture capital lowers abnormal returns (implying higher acquisition prices) for Information Technology (IT) acquisitions but not for other acquisitions. As evidence suggests that IT has relatively high levels of informational asymmetry, our analysis favors the certification hypothesis.
Brander Egan (2007) - The Role of VCs in Acquisitions (view source)
Revision as of 20:46, 16 February 2012
, 20:46, 16 February 2012no edit summary
Brander, James A. and Edward J. Egan (2008), "The Role of Venture Capitalists in Acquisitions", University of British Columbia, Working Paper. Proceedings of the Annual Conference, Administrative Science Association of Canada, Banff, Alberta (June ‘06),
==File(s)==
*[[Media:Brander_Egan_(2007)_-_The_Role_of_VCs_in_Acquisitions.doc | Brander Egan (2007) - The Role of VCs in Acquisitions (Working Paper)]]
==Keywords==
Acquisitions, Venture Capital, Information Technology, Information Asymmetry
==Abstract==
We study the effect of venture capital on returns to acquisitions of privately-held enterprises. One hypothesis is that venture capital provides “certification” of acquisition target quality under asymmetric information and therefore yields higher acquisition prices. An alternative “bargaining” hypothesis is that venture capitalists obtain higher acquisition prices through superior bargaining. An event study of U.S. acquisitions in the 1980-2006 period indicates that venture capital lowers abnormal returns (implying higher acquisition prices) for Information Technology (IT) acquisitions but not for other acquisitions. As evidence suggests that IT has relatively high levels of informational asymmetry, our analysis favors the certification hypothesis.
==Status==
This paper is currently:
*WP: An unpublished working paper
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