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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27869
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| Title: | Informational Hold-up and Performance Persistence in Venture Capital |
| Authors: | Ljungqvist, Alexander
Hochberg, Yael
Vissing-Jorgensen, Annette |
| Issue Date: | 6-Feb-2009 |
| Series/Report no.: | FIN-08-023 |
| Abstract: | We propose and test a theory of learning and informational hold-up in
the venture capital market. The model predicts that higher returns on
the current fund increase the probability that a VC will raise a
follow-on fund, the size of the follow-on fund, and the performance fee
investors are charged in the follow-on fund. If learning is asymmetric,
such that incumbent investors learn more about fund manager skill than
potential new investors, the model also predicts persistence in returns,
poor performance among first-time funds, persistence in investors from
fund to fund, and over-subscription in follow-on funds raised by
successful fund managers. Our empirical evidence is consistent with
these predictions. The model provides a unified framework for
understanding a series of empirical facts about the venture capital industry. |
| URI: | http://hdl.handle.net/2451/27869 |
| Appears in Collections: | Finance Working Papers
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