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| Author: | Bertoni, F. Colombo, M.G. Croce, A. |
| Title: | The effect of venture capital financing on the sensitivity to cash flow of firm's investments |
| Journal: | European Financial Management
2010 : SEP, VOL. 16:4, p. 528-551 |
| Index terms: | investment venture capital cash flow COMPANIES sensitivity analysis financing |
| Freeterms: | new-technology-based firms NTBFs IVC CVC |
| Language: | eng |
| Abstract: | The author based on researches the effect of venture capital (VC) financing on firms' investments in a longitudinal sample of 379 Italian unlisted new-technology-based firms (NTBFs) observed over the 10-year period from 1994 to 2003. Besides distinguishes the effects of VC financing according to the type of investor: independent VC (IVC) funds and corporate VC (CVC) investors.This paper considers that the investment rate of NTBFs is strongly positively correlated with their current cash flows and finds that after receiving VC financing, NTBFs increase their investment rate independently of the type of VC investor. However, the investments of CVC-backed firms remain sensitive to shocks in cash flows, whereas IVC-backed firms exhibit a low and statistically not significant investment–cash flow sensitivity that we interpret as a signal of the removal of financial constraints. |
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