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How do we know if 'Smart Money' is really smart? Market reactions when biotechnology firms disclose the identities of investors

How do we know if 'Smart Money' is really smart? Market reactions when biotechnology firms... Private placements of equity are generally viewed as signals because of the observable confidence 'smart investors' have to have in order to make the investment. We therefore ask the question if it is the transaction that creates the signal, or if it is knowledge of the investor that matters. Knowing investor identity permits others to assess the skill the investor has in assessing the value of the biotechnology firm. We examine 685 private placements and find disclosed investors have a much higher market reaction than do undisclosed investors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Technoentrepreneurship Inderscience Publishers

How do we know if 'Smart Money' is really smart? Market reactions when biotechnology firms disclose the identities of investors

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1746-5370
eISSN
1746-5389
DOI
10.1504/IJTE.2009.031504
Publisher site
See Article on Publisher Site

Abstract

Private placements of equity are generally viewed as signals because of the observable confidence 'smart investors' have to have in order to make the investment. We therefore ask the question if it is the transaction that creates the signal, or if it is knowledge of the investor that matters. Knowing investor identity permits others to assess the skill the investor has in assessing the value of the biotechnology firm. We examine 685 private placements and find disclosed investors have a much higher market reaction than do undisclosed investors.

Journal

International Journal of Technoentrepreneurship – Inderscience Publishers

Published: Jan 1, 2009

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