Venture capital and financial reporting in newly public firms

Hass, L.H. and Tarsalewska, M. (2019) Venture capital and financial reporting in newly public firms. In: The Oxford Handbook of IPOs. Oxford University Press, pp. 412-429. ISBN 9780190614577

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Financial intermediaries such as venture capitalists (VCs) not only provide financing, they also play an active role in firm governance and in financial practices before a firm goes public. Venture capitalists are actively engaged in monitoring and advising their portfolio firms. Thus, one also expects them to exert significant influence over the development of financial reporting practices. This chapter reviews recent literature and empirical evidence on VCs and financial reporting quality in newly public firms. It surveys the role of VCs in such activities as earnings management. In particular, it discusses how their monitoring activities and reputation can impact how their portfolio firms establish financial reporting practices. Subsequently, it also reviews the consequences of misreporting, and whether they affect VC behavior ex ante. Finally, the chapter uses recent data to provide empirical evidence on the effect of VCs on accrual and real earnings management.

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This is a pre-copy-editing, author-produced PDF of a chapter accepted for publication in The Oxford Handbook of IPOs following peer review. The definitive publisher-authenticated version Hass, L., & Tarsalewska, M. (2019-01-31). Venture Capital and Financial Reporting in Newly Public Firms. In (Ed.), The Oxford Handbook of IPOs. : Oxford University Press,. Retrieved 24 Apr. 2019, from is available online at:
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28 Feb 2019 15:30
Last Modified:
17 Sep 2023 04:03