Does Syndication with Local Venture Capitalists Moderate the Effects of Geographical and Institutional Distance?
Journal
Journal of International Management
Type
journal article
Date Issued
2014
Author(s)
Abstract
© 2014 Elsevier Inc. Venture capitalists (VCs) face additional risks and costs when they invest in firms located in geographically remote countries or in countries whose institutions differ substantially from those in their home countries. Our study considers foreign VCs. ' prospect of overcoming these investment obstacles as a rationale for syndicating with local VCs from the investment countries. Through such syndication, foreign VCs may obtain easier access to investment opportunities, improve the risk allocation and face lower information costs. Using a novel dataset of worldwide deals, we draw a diametrically opposed picture for the two kinds of distance: our results lend support to the conjecture that the obstacles of great institutional distance cannot be overcome with the help of a local VC, whereas those of great geographical distance can.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Volume
20
Start page
406
End page
420
Pages
14
Subject(s)
Division(s)
Eprints ID
259429