Economics at your fingertips  

Public policy and venture capital: Pursuing the disclosure goal

Belinda L. Del Gaudio, Claudio Porzio, Gabriele Sampagnaro and Vincenzo Verdoliva

Research in International Business and Finance, 2020, vol. 51, issue C

Abstract: Using a sample of US firms that went public between 2000 and 2011, we conduct a textual analysis of 10-K filings to jointly evaluate the impact of the Sarbanes-Oxley Act and venture capital (VC) on the disclosure practices of both VC- and non-VC-backed IPOs. We find that the annual reports of VC-backed IPOs are much more readable than the annual reports of their peers. This finding suggests that VCs introduce more clarity into financial reporting to improve the reaction in the firm market price to create value and feed their own reputation. On the contrary, we find that the Sarbanes-Oxley Act forces firms to produce longer 10-Ks consistent with the aim of the reform (Title IV) to enhance financial disclosures. In turn, this ends up to negatively impact on the readability.

Keywords: Venture capital; Public policy; IPOs; Text analysis; Readability (search for similar items in EconPapers)
JEL-codes: G23 G24 G32 G38 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.ribaf.2019.101104

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-05-16
Handle: RePEc:eee:riibaf:v:51:y:2020:i:c:s0275531919304325