Entrepreneurial Litigation and Venture Capital Finance

50 Pages Posted: 21 Feb 2016

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Bruce Haslem

Southern Utah University - Department of Economics and Finance

April M. Knill

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

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Date Written: February 20, 2016

Abstract

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

Cumming, Douglas J. and Haslem, Bruce and Knill, April M., Entrepreneurial Litigation and Venture Capital Finance (February 20, 2016). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2735383

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

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

Bruce Haslem

Southern Utah University - Department of Economics and Finance ( email )

Cedar City, UT 84720
United States

April M. Knill (Contact Author)

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

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