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Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures

Firm managers make ethical decisions regarding the form and quality of disclosure. Disclosure can have long-term implications for performance, earnings manipulation, and even fraud. We investigate the impact of venture capital (VC) backing on the quality and informativeness of disclosure controls an...

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Autores principales: Cumming, Douglas, Hass, Lars Helge, Myers, Linda A., Tarsalewska, Monika
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer Netherlands 2022
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10547658/
https://www.ncbi.nlm.nih.gov/pubmed/37799541
http://dx.doi.org/10.1007/s10551-022-05272-1
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author Cumming, Douglas
Hass, Lars Helge
Myers, Linda A.
Tarsalewska, Monika
author_facet Cumming, Douglas
Hass, Lars Helge
Myers, Linda A.
Tarsalewska, Monika
author_sort Cumming, Douglas
collection PubMed
description Firm managers make ethical decisions regarding the form and quality of disclosure. Disclosure can have long-term implications for performance, earnings manipulation, and even fraud. We investigate the impact of venture capital (VC) backing on the quality and informativeness of disclosure controls and procedures for newly public companies. We find that these controls and procedures are stronger, as evidenced by fewer material weaknesses in internal control under Section 302 of the Sarbanes–Oxley Act, when companies are VC-backed. Moreover, these disclosures are informative and are more likely to be followed by subsequent financial statement restatements than are disclosures made by non-VC-backed IPO companies.
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spelling pubmed-105476582023-10-05 Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures Cumming, Douglas Hass, Lars Helge Myers, Linda A. Tarsalewska, Monika J Bus Ethics Original Paper Firm managers make ethical decisions regarding the form and quality of disclosure. Disclosure can have long-term implications for performance, earnings manipulation, and even fraud. We investigate the impact of venture capital (VC) backing on the quality and informativeness of disclosure controls and procedures for newly public companies. We find that these controls and procedures are stronger, as evidenced by fewer material weaknesses in internal control under Section 302 of the Sarbanes–Oxley Act, when companies are VC-backed. Moreover, these disclosures are informative and are more likely to be followed by subsequent financial statement restatements than are disclosures made by non-VC-backed IPO companies. Springer Netherlands 2022-11-06 2023 /pmc/articles/PMC10547658/ /pubmed/37799541 http://dx.doi.org/10.1007/s10551-022-05272-1 Text en © The Author(s) 2022 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Original Paper
Cumming, Douglas
Hass, Lars Helge
Myers, Linda A.
Tarsalewska, Monika
Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title_full Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title_fullStr Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title_full_unstemmed Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title_short Does Venture Capital Backing Improve Disclosure Controls and Procedures? Evidence from Management’s Post-IPO Disclosures
title_sort does venture capital backing improve disclosure controls and procedures? evidence from management’s post-ipo disclosures
topic Original Paper
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10547658/
https://www.ncbi.nlm.nih.gov/pubmed/37799541
http://dx.doi.org/10.1007/s10551-022-05272-1
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