Corporate failure among venture capital funded companies : a case study approach
Corporate failure among venture capital funded companies : a case study approach
Corporate failure prediction models concentrate mainly on utilising financial ratios computed from published financial statements. In addition to exhibiting the potential weaknesses of using published financial statements, the majority of studies have been subject to criticism regards methodological aspects.
Formal failure prediction studies concentrating upon qualitative factors is scarce. Little research exists focusing on corporate failure and failure prediction of small venture capital funded companies. A survey was conducted amongst UK venture capital funds to shed some light on liaison and monitoring characteristics, and information on specific investee failures. The results revealed that smaller funds tended to experience higher portfolio failure rates than larger funds, and that investment style did not have any significant effect upon portfolio failure rates. Intuition played an important part in the monitoring of portfolio companies. A database of 97 failed projects indicated that ineffective senior management and market failure were the main causes of failure amongst funded projects.
Three in-depth case studies of venture capital funded failures were conducted, allowing a reconstruction of the events leading up to failure. This provided important information regards the underlying causes and symptoms of the failures, and the implications for existing research. Access to internally available information was an inherent assumption. The cases demonstrated the importance of non-financial information in a failure prediction context. The non-financial factors provided an earlier and more stable warning over time of potential failure. In addition they permitted continuous monitoring. The failures however, confirmed a more complex model of corporate failure, where compounding and mitigating factors were evident.
As the case study strategy was considered a sovereign research strategy, considerable attention was placed upon the methodological aspects. A unique system for evaluating evidential quality in case study research was constructed based upon judicial rules of evidence. In addition an operational structure was developed for the effective reconstruction of events in case studies.
University of Southampton
1994
Berthling-Hansen, Pål
(1994)
Corporate failure among venture capital funded companies : a case study approach.
University of Southampton, Doctoral Thesis.
Record type:
Thesis
(Doctoral)
Abstract
Corporate failure prediction models concentrate mainly on utilising financial ratios computed from published financial statements. In addition to exhibiting the potential weaknesses of using published financial statements, the majority of studies have been subject to criticism regards methodological aspects.
Formal failure prediction studies concentrating upon qualitative factors is scarce. Little research exists focusing on corporate failure and failure prediction of small venture capital funded companies. A survey was conducted amongst UK venture capital funds to shed some light on liaison and monitoring characteristics, and information on specific investee failures. The results revealed that smaller funds tended to experience higher portfolio failure rates than larger funds, and that investment style did not have any significant effect upon portfolio failure rates. Intuition played an important part in the monitoring of portfolio companies. A database of 97 failed projects indicated that ineffective senior management and market failure were the main causes of failure amongst funded projects.
Three in-depth case studies of venture capital funded failures were conducted, allowing a reconstruction of the events leading up to failure. This provided important information regards the underlying causes and symptoms of the failures, and the implications for existing research. Access to internally available information was an inherent assumption. The cases demonstrated the importance of non-financial information in a failure prediction context. The non-financial factors provided an earlier and more stable warning over time of potential failure. In addition they permitted continuous monitoring. The failures however, confirmed a more complex model of corporate failure, where compounding and mitigating factors were evident.
As the case study strategy was considered a sovereign research strategy, considerable attention was placed upon the methodological aspects. A unique system for evaluating evidential quality in case study research was constructed based upon judicial rules of evidence. In addition an operational structure was developed for the effective reconstruction of events in case studies.
This record has no associated files available for download.
More information
Published date: 1994
Identifiers
Local EPrints ID: 462791
URI: http://eprints.soton.ac.uk/id/eprint/462791
PURE UUID: f6ccc2d6-49dc-4075-a2b7-c36d260b1795
Catalogue record
Date deposited: 04 Jul 2022 20:04
Last modified: 04 Jul 2022 20:04
Export record
Contributors
Author:
Pål Berthling-Hansen
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics