The Electoral Cycle of Government Venture Capital Investments

39 Pages Posted: 10 May 2016 Last revised: 23 Nov 2016

See all articles by Fabio Bertoni

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control

Anita Quas

University of Milan

Date Written: November 1, 2016

Abstract

We study how reverse and opportunistic electoral investments cycles affect the timing, characteristics and performance of governmental venture capital fund (GVC) investments. Consistently with the reverse electoral investment cycle, which characterizes private investment, GVCs on average decelerate their investment activity in election years. In high-stakes election years however, the political nature of GVC prevails and GVC investments significantly accelerate, consistently with the existence of an opportunistic electoral investment cycle. GVC investments exhibit style drift in high-stakes elections years, and companies invested in these years grow less after the investment and are more likely to result in an unsuccessful exit.

Keywords: Governmental Venture Capital; Elections; Reverse Electoral Investment Cycle; Opportunistic Electoral Investment Cycle; Style drift

JEL Classification: G24, D72, G23, G18

Suggested Citation

Bertoni, Fabio and Quas, Anita, The Electoral Cycle of Government Venture Capital Investments (November 1, 2016). Available at SSRN: https://ssrn.com/abstract=2777169 or http://dx.doi.org/10.2139/ssrn.2777169

Fabio Bertoni

EM Lyon (Ecole de Management de Lyon) - Department of Economics, Finance, Control ( email )

23, av. Guy de Collongue BP 174
69132 Ecully Cedex
France

Anita Quas (Contact Author)

University of Milan ( email )

Via Festa del Perdono, 7
Milan, 20122
Italy

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