Do International Investors Enhance Private Firm Value? Evidence from Venture Capital

Journal of International Business Studies, Forthcoming

89 Pages Posted: 29 Oct 2015

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

April M. Knill

Florida State University College of Business; Florida State University - College of Law

Kelsey Syvrud

Florida State University; University of South Florida - Department of Finance

Date Written: October 29, 2015

Abstract

We examine the impact of international venture capital investors on private firm success spanning 81 countries over the years 1995-2010. The data examined indicate that, relative to deals in which the investor base is purely domestic, private firms that have an international investor base have a higher probability of exiting via an initial public offering (IPO) and higher IPO proceeds. The evidence is consistent with the view that while the benefits of internationalization may be difficult and costly to manage, for those firms that succeed in managing cross-border coordination costs, there is potential value for an IPO firm. The benefits relative to the costs of internationalizing the investor base for private firms sold in acquisitions, by contrast, are much less pronounced. The most important source of this benefit appears to be access to capital.

Keywords: Venture capital, International syndication, IPO, Acquisition, Valuation

JEL Classification: E6, G2, K2

Suggested Citation

Cumming, Douglas J. and Knill, April M. and Syvrud, Kelsey, Do International Investors Enhance Private Firm Value? Evidence from Venture Capital (October 29, 2015). Journal of International Business Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2683398

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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

April M. Knill

Florida State University College of Business ( email )

Tallahassee, FL 32306-1042
United States
(850) 644-2047 (Phone)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

Kelsey Syvrud (Contact Author)

Florida State University ( email )

Tallahasse, FL 32306
United States

University of South Florida - Department of Finance ( email )

Tampa, FL 33620-5500
United States

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