Does Religiosity Influence Venture Capital Investment Decisions?

Journal of Corporate Finance, Forthcoming

46 Pages Posted: 28 Aug 2017 Last revised: 25 Mar 2020

See all articles by Justin Chircop

Justin Chircop

Lancaster University Management School

Sofia Johan

Florida Atlantic University - Finance; University of Aberdeen; Tilburg Law and Economics Center (TILEC)

Monika Tarsalewska

University of Exeter Business School

Date Written: January 1, 2019

Abstract

Using a sample of 91,020 VC investments in the US, we study whether religiosity influences VC investment decisions. Based on prior literature that finds a positive relation between religiosity and risk aversion we posit that VC located in more religious counties make less risky investments. We find that VC located in more religious areas are more likely to be involved in staging, syndication, and have a higher propensity to invest in later and expansion stages of the portfolio company. The effect of religiosity on VC behavior is stronger when the VC is located in a county with more Protestants relative to Catholics. Further, we find that religiosity is related to a higher propensity for the VC to exit the investment via an IPO. Taken together our results suggest that VC located in more religious counties are more risk averse and their investments are of better quality.

Keywords: Religiosity, Venture Capital, Risk-Aversion

JEL Classification: D83, G20, G24, L14, M13

Suggested Citation

Chircop, Justin and Johan, Sofia A. and Tarsalewska, Monika, Does Religiosity Influence Venture Capital Investment Decisions? (January 1, 2019). Journal of Corporate Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3026156 or http://dx.doi.org/10.2139/ssrn.3026156

Justin Chircop

Lancaster University Management School ( email )

Lancaster University
Lancaster, Lancashire LA1 4YX
United Kingdom

Sofia A. Johan

Florida Atlantic University - Finance ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

University of Aberdeen ( email )

Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Monika Tarsalewska (Contact Author)

University of Exeter Business School ( email )

Streatham Court, Streatham Campus,
Rennes Drive
Exeter, Devon EX4 4PU
United Kingdom

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