Voluntary disclosure of corporate venture capital investments |
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| Institution: | 1. ETH Zurich, CEPR, CESifo, Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) at the University of Nottingham, Oxford University Centre for Business Taxation (CBT), KOF, Leonhardstrasse 21, LEE G 116, 8092 Zurich, Switzerland;2. ETH Zurich, KOF, Leonhardstrasse 21, LEE G 116, 8092 Zurich, Switzerland;3. ETH Zurich, International Management Institute, School of Management and Law, Zurich University of Applied Sciences (ZHAW), Zurich University of Applied Sciences, School of Management and Law, Stadthausstrasse 14, P.O. Box 8401, Winterthur, Switzerland;1. Chair of Corporate Finance, University of Hohenheim, Wollgrasweg 49, 70599 Stuttgart, Germany;2. ZEW Mannheim, L 7, 1, 68161 Mannheim, Germany;1. School of Business, Jiangnan University, Wuxi, Jiangsu 214122, China;2. F.C. Manning School of Business Administration, Acadia University, Wolfville, NS B4P 2R6, Canada;3. Odette School of Business, University of Windsor, Windsor, ON N9B 3P4, Canada |
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| Abstract: | In this paper, we investigate drivers of corporate venture capital investment announcements. Consistent with voluntary information disclosure theories, we find that a public announcement is less likely to be made when the start-up firm is in the seed stage but more likely when the parent company is large, active in concentrated markets and in non-high-tech industries; spends heavily on internal R&D and capital expenditures; has low leverage ratio; and faces more information asymmetry problems. In addition, corporate venture capital programs managed externally disclose more often than internal programs. We find that parent companies facing more severe asymmetric information problems enjoy the highest abnormal returns in response to announcements. This study contributes to the literature on voluntary information disclosure in that it evidences that larger corporations use disclosure of some of their investments in innovative startups strategically as a way to convey valuable information to the market. |
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| Keywords: | Information disclosure Public announcements Corporate venture capital |
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