Browsing by Author "Buchner, Axel"

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    The association between earnings forecast in IPO prospectuses and earnings management: An empirical analysis
    (Elsevier, 2017-09-01) Buchner, Axel; Mohamed, Abdulkadir; Saadouni, Brahim
    This paper examines the level of earnings management for large IPOs that provide earnings forecasts and those that do not provide forecasts in the IPO prospectus. Using a sample f 368 IPO firms listed on the London Stock Exchange between 1985 and 2012, we find that the level of earnings management is lower for IPOs that provided earnings forecasts, than for those which did not provide a forecast. This evidence is robust, controlling for endogeneity and sample selection. Further tests reveal that IPOs that provide forecasts outperform their counterparts in the long run, using various long term performance measures. Overall, our results suggest that earnings forecasts at the time of listing convey useful information to investors on the quality of the company listing in the market.
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    Diversification, risk, and returns in venture capital
    (Elsevier, 2017-06-09) Buchner, Axel; Mohamed, Abdulkadir; Schwienbacher, Armin
    We explore an alternative, finance theory-based explanation for the documented positive relationship between fund diversification (or lack of fund specialization) and performance in venture capital (VC). Our proposed “Risk Hypothesis” posits that the expected negative impact of diversification on fund risk induces fund managers to endogenously select riskier investments, which in turn leads to higher performance of more diversified funds. While other channels may also be at play, we provide results that support this hypothesis for an international sample of VC funds. However, this effect is weakened when expertise is limited. The study offers implications of how VC fund managers' investment decisions are influenced by strategic portfolio considerations, which in turn affect which innovative ventures receive funding.