Abnormal Stock Returns and Venture Capital Funding Event Study of Six Down Round Venture Capital Funding Announcement Dates

This paper analyzes the reaction of stock prices to the announcement of a round of financing raised by a venture capital-backed firm at a valuation lower than in a previous round. The event study is performed to analyze short-term stock price reactions prior to and following the announcement of a down round. This study finds the standardized cumulative average abnormal returns Wi for the companies sampled statistically insignificant at a confidence level of 95%.