Venture Capital Investments and Merger and Acquisition Activity Around the World

65 Pages Posted: 20 Nov 2017 Last revised: 16 Jun 2018

See all articles by Gordon M. Phillips

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Alexei Zhdanov

Pennsylvania State University

Multiple version iconThere are 2 versions of this paper

Date Written: June 16, 2018

Abstract

We examine the relation between venture capital (VC) investments and mergers and acquisitions (M&A) activity in 48 countries around the world. We find evidence of a strong positive association between VC investments and lagged M&A activity, consistent with the hypothesis that an active M&A market provides exit opportunities for VC companies and therefore incentivizes them to invest. We also explore the effects of country-level pro-takeover legislation passed internationally and U.S. state-level antitakeover business combination laws on VC activity. VC activity intensifies after enactment of country-level takeover friendly legislation and decreases following passage of state antitakeover laws in the U.S.

Keywords: Venture Capital, Mergers and Acquisitions, Merger Waves, Takeover Laws

JEL Classification: G15, G24, G33

Suggested Citation

Phillips, Gordon M. and Zhdanov, Alexei, Venture Capital Investments and Merger and Acquisition Activity Around the World (June 16, 2018). Tuck School of Business Working Paper No. 3072665. Available at SSRN: https://ssrn.com/abstract=3072665 or http://dx.doi.org/10.2139/ssrn.3072665

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alexei Zhdanov

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

HOME PAGE: http://www.alexeizhdanov.com

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