Entrepreneurial Litigation and Venture Capital Finance
50 Pages Posted: 21 Feb 2016
Date Written: February 20, 2016
This paper empirically examines the interaction between entrepreneurial plaintiff firm litigation and venture capital (VC). The data indicate that, relative to non-plaintiffs, firms that litigate prior to [after] obtaining VC (1) receive financing from less [more] reputable venture capitalists (VCs), (2) are subject to greater [similar] oversight by VCs, (3) receive less [more] VC funding, (4) are more likely to exit through an initial public offering than through an acquisition, and (5) when litigation occurs after VC financing, they are also less likely to be liquidated. The results are robust to different specifications, methodologies, and endogeneity checks.
Keywords: Litigation, venture capital
JEL Classification: G24, K4, L26
Suggested Citation: Suggested Citation