Legal Framework Quality and Success of (Different Types of) Venture Capital Investments
Journal
Journal of Banking and Finance
Type
journal article
Date Issued
2018
Author(s)
Abstract
© 2017 Elsevier B.V. Drawing on an analysis of 8,270 companies from 41 countries, I explore the relationship between success of venture capital investments and legal frameworks in the investment countries. Legal framework quality is related to success, but the effect varies with the deal type. First, the significant and positive relationship between legal framework quality and success is more pronounced for domestic deals than for international deals. Further investigations suggest that international venture capitalists often exit their portfolio companies abroad, particularly when these companies are located in countries with inefficient legal frameworks. In addition, the results lend support to the view that international venture capitalists have a greater experience and reputation. Second, legal framework quality seems to be more important for success in syndicated than in standalone deals. This finding supports the view that a sound legal framework may improve the benefit–cost balance of syndication, while an inefficient legal framework may tend to increase costs in syndicated deals.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Volume
87
Start page
333
End page
350
Pages
17
Subject(s)
Division(s)
Contact Email Address
tereza.tykvova@unisg.ch
Eprints ID
259423
File(s)![Thumbnail Image]()
open.access
Name
1-s2.0-S0378426617302674-main.pdf
Size
624.95 KB
Format
Adobe PDF
Checksum (MD5)
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