Taking a Second Look in a Warped Crystal Ball: Explaining the Accuracy of Revised Forecast

Violetta Gerasymenko and Russell Wayne Coff
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Violetta Gerasymenko: HEC Paris - Ecole des Hautes Etudes Commerciales

Working Papers from HAL

Abstract: The fundamental questions we address are whether firms with a higher initial forecasting ability are able to accurately revise the exit forecasts of their investments; and how co-investment partners and value-adding commitment with their investment influence the main effect. We explore these questions with novel and unique data collected via mixed research methods on venture capital firms' forecasts of 114 portfolio companies. We find that venture capital firms that are better at making initial forecasts are less effective in revising their forecasts. In addition, while the number of co-investment partners positively moderate this relationship, venture capital firms' value-adding commitment moderates it negatively. Our findings contribute to the literature on organizational forecasting as well as inter-organizational knowledge transfer and knowledge creation. They also provide novel insights into venture capital literature and practice.

Keywords: forecasting; syndication; value-adding commitment; venture capital (search for similar items in EconPapers)
Date: 2016-09-02
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-01985376

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