| By: |
Douglas Cumming (University of Alberta School of Business, Edmonton, Alberta, Canada);
Daniel Schmidt (J.W. Goethe-Universität Frankfurt/Main and CEPRES);
Uwe Walz (J.W. Goethe-Universität Frankfurt/Main and Center for Financial Studies) |
| Abstract: |
We analyze governance with a dataset on investments of venture capitalists in
3848 portfolio firms in 39 countries from North and South America, Europe and
Asia spanning 1971-2003. We find that cross-country differences in Legality
have a significant impact on the governance structure of investments in the VC
industry: better laws facilitate faster deal screening and deal origination, a
higher probability of syndication and a lower probability of potentially
harmful co-investment, and facilitate board representation of the investor. We
also show better laws reduce the probability that the investor requires
periodic cash flows prior to exit, which is in conjunction with an increased
probability of investment in high-tech companies. |
| Keywords: |
Venture Capital, Corporate Governance, Syndication, Entrepreneurial Finance |
| JEL: |
G24 G31 G32 |
| Date: |
2004–01–17 |
| URL: |
http://d.repec.org/n?u=RePEc:cfs:cfswop:wp200417&r=acc |