Work

Transmission of Information from Private to Public Markets

Year: 2025

Type: article

Abstract: We report evidence consistent with institutional investors using industry-level information that they obtain from their investments in venture capital (VC) funds to earn excess returns in publicly traded stocks. We use court rulings regarding the Freedom of Information Act as an exogenous shock affecting the information flow between VC funds and institutional investors to show that the excess returns are explained by information received via this channel. Thus, institutional investors serve as conduits of information from private to public markets. In the process, institutional investors earn higher returns from their VC investments than implied by the cash flows received therefrom.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s0022109025102330

Authors: Shrijata Chattopadhyay, John J. McConnell, Timothy E. Trombley, Mehmet Deniz Yavuz

Institutions: Binghamton University, Purdue University West Lafayette, Illinois State University

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,550

OpenAlex ID: W4415785689

FWCI: 1.878

Cites: 45

Cited by: 3

Related to: