Valuation as Promise and Care

The Use of Accounting in the Entrepreneurial Economy

Jan Mouritsen, Dane Pflueger

Research output: Working paperResearch

Abstract

This is a study of analysts’ use of accounting information for valuation purposes in a venture capital setting. This setting is characterized in terms of the distinctive scouting and coaching work of venture capital funders, and the unproven and incomplete nature of the ventures and entrepreneurs, which seek funding to scale operations, pivot into new markets, internationalize, or undertake some other kind of fundamental change. Based on interviews with entrepreneurs (project-makers) and venture funders (analysts), a four phase model of valuation is proposed. The model illuminates that, in contrast with common assumptions in the existing literature, accounting is mobilized neither to reveal truth nor constitute knowledge about the objects of investment, but to promise and to care. This paper articulates these two concepts in the context of accounting. Promising is shown to be a means not to implement a predesigned business plan and a budgeted set of activities but to commit to a new and unclear future and agree high and sometimes unrealistic expectations. Caring is shown not to be a means to predict a final fate for the organization, but to give and take, interact and sometimes discipline in order to determine what is necessary to preserve and possible to change. Understanding that what is valued is not what exists but what is possible to create helps to resolve puzzles about accounting’s uncertain and ambiguous status and significance in the entrepreneurial economy. It also and more generally illustrates how accounting operates in relation to an unknowable object and future: not as a means to know or reveal but to write and rewrite a daring and ambitious narrative in which the protagonists (here the project-maker and venture) become something else (a manager and an organization).
Original languageEnglish
Place of PublicationParis
PublisherHEC Paris
Number of pages43
DOIs
Publication statusPublished - 2018
SeriesHEC Paris Research Paper
Number2018-1255

Keywords

  • Analysts
  • Valuation
  • Qualitative research
  • Venture capital

Cite this

Mouritsen, Jan ; Pflueger, Dane. / Valuation as Promise and Care : The Use of Accounting in the Entrepreneurial Economy. Paris : HEC Paris, 2018. (HEC Paris Research Paper; No. 2018-1255).
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Valuation as Promise and Care : The Use of Accounting in the Entrepreneurial Economy. / Mouritsen, Jan; Pflueger, Dane.

Paris : HEC Paris, 2018.

Research output: Working paperResearch

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