Abstract

http://ssrn.com/abstract=537243
 
 

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Legality and Venture Governance Around the World


Douglas J. Cumming


York University - Schulich School of Business

Daniel Schmidt


University of Frankfurt, CEPRES Center of Private Equity Research

Uwe Walz


Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Goethe University Frankfurt - Research Center SAFE

January 1, 2008

Journal of Business Venturing, Forthcoming

Abstract:     
We analyze governance with a new 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 provide evidence that cross-country differences in legality, including legal origin and accounting standards, 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 investor board representation of the investor and the use of securities that do not require periodic cash flows prior to exit. We also show country-specific differences exist apart from legal and economic development.

Number of Pages in PDF File: 38

Keywords: Venture Capital, Corporate Governance, Syndication, Entrepreneurial Finance

JEL Classification: G24, G31, G32

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Date posted: April 16, 2008 ; Last revised: September 10, 2008

Suggested Citation

Cumming, Douglas J. and Schmidt, Daniel and Walz, Uwe, Legality and Venture Governance Around the World (January 1, 2008). Journal of Business Venturing, Forthcoming. Available at SSRN: http://ssrn.com/abstract=537243 or http://dx.doi.org/10.2139/ssrn.537243

Contact Information

Douglas J. Cumming (Contact Author)
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
HOME PAGE: http://www.venturecapitalprivateequitycontracting.com/
Daniel Schmidt
University of Frankfurt, CEPRES Center of Private Equity Research ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
Uwe Walz
Goethe University Frankfurt - Institute of Economics ( email )
Postfach 81
D-60054 Frankfurt
Germany
Center For Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
Goethe University Frankfurt - Research Center SAFE ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
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