Abstract

http://ssrn.com/abstract=997934
 
 

References (73)



 
 

Citations (21)



 


 



The Importance of Trust for Investment: Evidence from Venture Capital


Laura Bottazzi


Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; University of Bologna - Department of Economics; Centre for Economic Policy Research (CEPR)

Marco Da Rin


Tilburg University, Department of Finance; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Thomas F. Hellmann


Saïd Business School, University of Oxford ; University of British Columbia (UBC) - Sauder School of Business; University of Oxford - Said Business School

November 05, 2015

CentER Discussion Paper Series No. 2010-49 (Revision of No. 2009-43)
EFA 2007 Ljubljana Meetings Paper
ECGI - Finance Working Paper No. 187/2007
TILEC Discussion Paper No. 2010-023

Abstract:     
We examine the effect of trust in venture capital. Our theory predicts a positive relationship between trust and investment, and a negative relationship with investment performance. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations indeed predicts a venture capitalist’s investment decisions and has a negative correlation with investment performance We also derive theoretical predictions that earlier stage investments require higher trust, that syndication is more valuable in low trust situations, and that higher trust investors use more contingent contracts. The empirical evidence supports these predictions.

Number of Pages in PDF File: 43

Keywords: Social Capital, Trust, Financial Contracts, Venture Capital, Corporate Governance

JEL Classification: G24, G34, K22, L14, M13, O16


Open PDF in Browser Download This Paper

Date posted: July 3, 2007 ; Last revised: November 7, 2015

Suggested Citation

Bottazzi, Laura and Da Rin, Marco and Hellmann, Thomas F., The Importance of Trust for Investment: Evidence from Venture Capital (November 05, 2015). CentER Discussion Paper Series No. 2010-49 (Revision of No. 2009-43); EFA 2007 Ljubljana Meetings Paper; ECGI - Finance Working Paper No. 187/2007; TILEC Discussion Paper No. 2010-023. Available at SSRN: http://ssrn.com/abstract=997934

Contact Information

Laura Bottazzi
Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )
Via Roentgen 1
Milan, 20136
Italy
+39 02 5836 3326 (Phone)
+39 02 5836 3302 (Fax)
HOME PAGE: http://www.igier.uni-bocconi.it/bottazzi
University of Bologna - Department of Economics
Strada Maggiore 45
Bologna, 40125
Italy
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Marco Da Rin (Contact Author)
Tilburg University, Department of Finance ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Tilburg Law and Economics Center (TILEC)
Warandelaan 2
Tilburg, 5000 LE
Netherlands
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
Thomas F. Hellmann
Saïd Business School, University of Oxford ( email ) ( email )
Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)
HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann
University of British Columbia (UBC) - Sauder School of Business ( email )
2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8476 (Phone)
604-822-8477 (Fax)
HOME PAGE: http://strategy.sauder.ubc.ca/hellmann
University of Oxford - Said Business School ( email ) ( email )
Park End Street
Oxford, OX1 1HP
Great Britain
+44 (0)1865 288937 (Phone)
HOME PAGE: http://www.sbs.ox.ac.uk/community/people/thomas-hellmann
Feedback to SSRN


Paper statistics
Abstract Views: 5,342
Downloads: 603
Download Rank: 28,126
References:  73
Citations:  21
Paper comments
No comments have been made on this paper

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.281 seconds