Law, Finance, and Venture Capital: The Cost of Capital for High-Tech Firms

44 Pages Posted: 17 Jul 2012

See all articles by Thomas W. Hall

Thomas W. Hall

Christopher Newport University

Multiple version iconThere are 2 versions of this paper

Date Written: July 16, 2012

Abstract

We use data from a professionally-conducted survey of high-technology managers to examine international variation in private equity contracting and cost of capital. Employing new variables and analyzing hundreds of financing rounds in the U.S., Europe, and Israel, we find that investor sophistication is associated with the ownership ratio (amount raised/valuation), but that funding rounds in common law countries do not receive lower ownership ratios vis-à-vis those in civil law countries. We also find that the institutional environment matters for exit strategy and valuation.

Keywords: Venture capital, international finance, valuation, legal origin

JEL Classification: G24, G32

Suggested Citation

Hall, Thomas William, Law, Finance, and Venture Capital: The Cost of Capital for High-Tech Firms (July 16, 2012). Available at SSRN: https://ssrn.com/abstract=2109358 or http://dx.doi.org/10.2139/ssrn.2109358

Thomas William Hall (Contact Author)

Christopher Newport University ( email )

United States

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