The impact of fund inflows on staging and investment behaviour. (September 2014)

• Record Type: Journal Article
• Authors: Lauterbach, Rainer; Hass, Lars Helge; Schweizer, Denis
• Is Part Of: International small business journal. Volume 32:Number 6(2014)
• Page Start: 644
• Page End: 666
• Publication Date: 2014-09
• Subjects: behavioural finance -- China -- decision making -- private equity -- staging -- venture capital; Small business -- Periodicals; 338.64205
• DOI: 10.1177/0266242613500504
• Languages: English
• ISSNs: 0266-2426

Abstract

This article demonstrates that increased inflows of capital into private equity and venture capital funds can influence the investment behaviour of fund managers by increasing staging intensity, increasing amount per financing round, and accelerating speed of capital allocation. These changes do not appear to be related to expectations of improved investment performance. The study extends the work of Gompers and Lerner who interpret these inflows as demand pressure for venture capital securities to drive up prices during periods of high inflows. Using a unique dataset, the study examines the effects of this pressure on investment behaviour.