The Value Relevance of Financial Statements within and Across Private and Public Equity Markets

2003 ◽  
Author(s):  
John R.M. Hand
Keyword(s):  
Value Relevance ◽  
Equity Markets ◽  
Financial Statements ◽  
Private And Public ◽  
Public Equity

scholarly journals Survival strategies for start-ups

2005 ◽  
Vol 11 (2) ◽  
Author(s):  
Dina Chaya
Keyword(s):  
Business Models ◽  
Critical Mass ◽  
Equity Markets ◽  
Survival Strategies ◽  
Private And Public ◽  
Public Equity ◽  
Start Ups ◽  
Considerable Pressure

Following recent difficult private and public equity markets, many biotech start-ups are now under considerable pressure. In this environment, start-ups are struggling to secure financing and their valuations are being trimmed by investors. In order to survive, firms are being compelled to adjust their business models to satisfy investors, enter alliances to decrease their cash burn and consolidate with external assets to build critical mass internally.

The Value Relevance of Financial Statements in the Venture Capital Market

2005 ◽  
Vol 80 (2) ◽  
pp. 613-648 ◽  
Author(s):  
John R. M. Hand
Keyword(s):  
Venture Capital ◽  
Capital Market ◽  
Value Relevance ◽  
Financial Statements ◽  
Financial Statement ◽  
The Public ◽  
Equity Values ◽  
Biotechnology Firms ◽  
Structural Differences ◽  
Public Equity

This study examines the value relevance of financial statement data and nonfinancial statement information within and across the pre-IPO venture capital and post-IPO public equity markets. For a sample of U.S. biotechnology firms, I find that financial statements are highly value-relevant in the venture capital market, and that the signs of the associations between equity values and financial statement data in that market are similar to those in the public equity market, despite significant structural differences between the two. I also find that the value relevance of financial statements generally increases as firms mature, consistent with financial statements capturing the increasing intensity of assets-in-place relative to future investment options. In contrast, the value relevance of nonfinancial statement information decreases as firms mature, indicating that, in a dynamic sense, financial statements and nonfinancial statement information of venture-backed pre-IPO biotech companies are information substitutes in valuation, not complements.

scholarly journals Can Financial Engineering Cure Cancer?

2013 ◽  
Vol 103 (3) ◽  
pp. 406-411 ◽  
Author(s):  
David E Fagnan ◽  
Jose Maria Fernandez ◽  
Andrew W Lo ◽  
Roger M Stein
Keyword(s):  
Financial Engineering ◽  
Analytical Framework ◽  
Capital Requirements ◽  
Debt Financing ◽  
Investment Projects ◽  
Time Horizons ◽  
Long Time ◽  
Private And Public ◽  
Public Equity ◽  
Highly Correlated

Traditional financing sources such as private and public equity may not be ideal for investment projects with low probabilities of success, long time horizons, and large capital requirements. Nevertheless, such projects, if not too highly correlated, may yield attractive risk-adjusted returns when combined into a single portfolio. Such “megafund” portfolios may be too large to finance through private or public equity alone. But with sufficient diversification and risk analytics, debt financing via securitization may be feasible. Credit enhancements (i.e., derivatives and government guarantees) can also improve megafund economics. We present an analytical framework and illustrative empirical examples involving cancer research.

The Value Relevance Of The Financial Statements’ Information:, The Moderating Role Of The Board Of Directors

2021 ◽  
pp. 177
Author(s):  
عفت عبدالرحمن الطاهات ◽  
حمزة حسين الموالي ◽  
ياسين عبدالرحمن الطاهات
Keyword(s):  
Board Of Directors ◽  
Value Relevance ◽  
Financial Statements ◽  
The Board Of Directors ◽  
Moderating Role

The Limitations of Financial Reporting on Innovation and Its Value-Relevance for the Investor's Decision-Making Process

2019 ◽  
pp. 390-418
Author(s):  
Francisco Leote ◽  
Ana Damião
Keyword(s):  
Decision Making ◽  
Financial Reporting ◽  
Value Relevance ◽  
Financial Statements ◽  
Individual Characteristics ◽  
Decision Making Process ◽  
Accounting Systems ◽  
Financial Factors ◽  
The Individual ◽  
Industry Sectors

This chapter aims to present some limitations of financial reporting on innovation with an impact on the investor's decision-making process. In order to do so, the authors show how accounting recognizes and measures innovation factors: the intangibles. Based on the literature, the authors discuss how the value relevance of financial reporting on innovation is conditioned by non-financial factors. The impacts of the adoption of IFRSs, the effect of the industry sectors and the effect of the individual characteristics of the different countries on the value relevance of the intangible assets are analyzed. The literature suggests a decrease in the value relevance of financial statements due to the manner in which intangibles are recognized and measured in accounting. However, financial reporting on innovation is value relevant to the investor's decision-making and is conditioned by non-financial factors. Value relevance differs among different industry sectors, between different countries and is conditioned by the accounting systems used in the preparation of the financial information.

scholarly journals Does the Market Correctly Value Investment Options?*

2020 ◽  
Vol 24 (6) ◽  
pp. 1159-1201
Author(s):  
Evgeny Lyandres ◽  
Egor Matveyev ◽  
Alexei Zhdanov
Keyword(s):  
Stock Market ◽  
Real Options ◽  
Equity Markets ◽  
Optimal Investment ◽  
Investment Under Uncertainty ◽  
Innovative Firms ◽  
Public Equity

Abstract This paper shows that the stock market misprices firms’ investment options. We build a real options model of optimal investment under uncertainty to estimate the value of firms’ investment options. We show that firms with valuable investment options have a higher likelihood of being mispriced. Importantly, this mispricing is not one-sided, as such firms are equally likely to be undervalued or overvalued. Our paper adds to the debate on whether public equity markets are myopic and systematically undervalue innovative firms. We show that this is not necessarily the case.

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