Venture Companies and the Adequacy of the Danish Financial Statement Act.

Christian Klingspor Stryhn

Student thesis: Master thesis


This scientific paper examines the adequacy of the Danish Financial Statement Act on account-ing standards for unlisted shares in Venture Capital firms. The study investigates whether the existing accounting regulations sufficiently enable Venture Capital firms to provide reliable financial statements to investors. Through an analysis of 28 financial statements from Venture Capital firms in Denmark the sufficiency of accounting regulations is researched. The findings of the thesis indicate that a significant amount of Danish Venture Capital firms did not comply with the requirements of the Danish Financial Statement Act when valuing unlisted shares at fair value. Moreover, the prevalence of Venture Capital firms valuing unlisted shares at cost serves as an indication that the current annual accounting regulations might not contain the informational needs of investors to value their investments. The lack of sufficient accounting regulations raises doubts about the extent to which investors trust the financial statements of Venture Capital firms. The study highlights the inherent difficulties for Venture Capital firms to determine reliable fair values for unlisted shares, particularly in the case of small and new firms. While it is recognized that investing in Venture Capital entails inherent risks, the pursuit of accuracy in financial statements can limit the amount of information for investors to make informed decisions on. This study concludes that the current Danish Financial Statement Act is not sufficiently enable to produce reliable financial statements for investors in Venture Capital firms.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2023
Number of pages84