The Performance of Publicly Traded European Venture Capital Companies

Abstract

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The stock market return and the risk of 33 quoted European venture capital companies during the period 1977-1991 are studied. The return is negative on average with eight o f the 33 companies having a return that is higher than the market return. However, the systematic risk (measured by the beta o f the stock) is lower than the market risk. When taking the risk into account, no company has a return that is significantly higher than zero, but four companies have a return that is significandy lower than zero. When interpreting these results, one has to take into account that most shares of venture capital companies trade at a significant discount relative to their net asset value, indicating that the long-term return that investors can expect in the future, may be higher than in the past. Venture capital companies that are specialized in a specific investment stage have a higher return, while the regional companies have a lower return than general companies. The systematic risk o f specialized companies is higher than that of general companies.