Venture capital supply and accounting information system development

Reid, Gavin and Mitchell, Falconer and Terry, Nicholas (1997) Venture capital supply and accounting information system development. Entrepreneurship Theory and Practice, 21 (4). pp. 45-62. ISSN 1042-2587

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A study was conducted to examine the origins and characteristics of developments in the accounting information systems of firms that are going through the infusion of external capital stage of their development. Findings provide considerable support for the propositions that considerable monitoring demands in the form of accounting provision requirements will be imposed by the venture capital investor (VCI), that fulfilling these monitoring demands by accounting information and other sources stimulates the need for internal accounting change within the investee firm, that increases in the variety and extent of the procedures adopted to meet increased monitoring demands will occur in the frequency of provision of accounting information and will lead to the development of accounting information support to internal decision-making, and that the capital supply from the VCI has a strong universalist influence on internal accounting systems in investee firms. The implications of these findings for practitioners are discussed.