Abstract
We study whether private firm public financial statements influence the probability of raising venture capital (VC) and private equity (PE) financing. We hypothesize that private firms' public financial statements can help the VC/PE search process by providing a less costly screening tool to identify potential targets at the pre-investment stage. Using two complementary settings, we find that an increase in financial statement availability/transparency is associated with an increase in the probability of a private firm obtaining VC/PE financing. Our evidence highlights the importance of public financial statements in the decision of making of private investors in the early stages of a private firm's financing process.
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