Journal Article

The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

William R. Kerr, Josh Lerner and Antoinette Schoar

in The Review of Financial Studies

Published on behalf of The Society for Financial Studies

Volume 27, issue 1, pages 20-55
Published in print January 2014 | ISSN: 0893-9454
Published online October 2011 | e-ISSN: 1465-7368 | DOI: https://dx.doi.org/10.1093/rfs/hhr098
The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

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  • Information, Knowledge, and Uncertainy
  • Investment Banking
  • Entrepreneurship
  • Business and Management
  • Technological Change; Research and Development

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This article documents the fact that ventures funded by two successful angel groups experience superior outcomes to rejected ventures: They have improved survival, exits, employment, patenting, Web traffic, and financing. We use strong discontinuities in angel- funding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups.

Keywords: D81; G24; L26; M13; O31; O32

Journal Article.  15205 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; Investment Banking ; Entrepreneurship ; Business and Management ; Technological Change; Research and Development

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