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Venture Capital Investment Duration in Canada and the United States

Posted: 18 Jan 2001  

Jeffrey G. MacIntosh

University of Toronto - Faculty of Law

Douglas J. Cumming

York University - Schulich School of Business

Abstract

This paper considers efficient venture capital investment duration for different types of entrepreneurial firms so that on exit information asymmetries between the venture capitalist (as seller) and the new owners of the investment are minimized, and capital gains maximized. We hypothesize that a number of factors are likely to affect investment duration, and our empirical tests confirm the statistical significance of some of these variables (stage of firm at first investment, capital available to the venture capital industry, whether the exit was preplanned, whether the exit was made in response to an unsolicited offer). However, the fit between our theoretical model and the data is stronger in the United States than in Canada, offering evidence in support of the view that Canadian and U.S. venture capital markets are far from fully integrated.

JEL Classification: G24, G28, G32, G38, K22

Suggested Citation

MacIntosh, Jeffrey G. and Cumming, Douglas J., Venture Capital Investment Duration in Canada and the United States. Journal of Multinational Financial Management, Vol. 11, December 2001. Available at SSRN: https://ssrn.com/abstract=218388

Jeffrey G. Macintosh

University of Toronto - Faculty of Law ( email )

78 and 84 Queen's Park
Toronto, Ontario M5S 2C5
Canada
416-978-5795 (Phone)
416-978-2648 (Fax)

Douglas J. Cumming (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://booksite.elsevier.com/9780124095373/

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