Investment Syndication Networks and International Differences in Legal Enforcement and Culture

72 Pages Posted: 1 Apr 2020

See all articles by Douglas J. Cumming

Douglas J. Cumming

Florida Atlantic University

Ali Mohammadi

Copenhagen Business School - Department of Strategy and Innovation; Danish Finance Institute; Royal Institute of Technology (KTH) - Center of Excellence for Science and Innovation Studies

Simona Zambelli

University of Florence

Date Written: March 4, 2020

Abstract

Being part of an investment syndicate offers various network benefits, but also exposes risks that someone in the network acts in a manner that violates securities laws. These risks differ depending on the ways in which securities laws are enforced. Public enforcement, with strong investigative powers and strong group sanctions, discourages the formation of syndication networks. Private enforcement, with strong disclosure and liability standards, encourages the formation of syndication networks. We present evidence strongly consistent with the negative impact of public enforcement on network density, and partial support for the positive impact of private enforcement depending on cultural conditions.

Keywords: Networks, Venture Capital, Syndication, Legal Enforcement, Culture

JEL Classification: G23, G24, G28

Suggested Citation

Cumming, Douglas J. and Mohammadi, Ali and Zambelli, Simona, Investment Syndication Networks and International Differences in Legal Enforcement and Culture (March 4, 2020). Available at SSRN: https://ssrn.com/abstract=3550168 or http://dx.doi.org/10.2139/ssrn.3550168

Douglas J. Cumming

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States

HOME PAGE: http://sites.google.com/view/douglascumming/bio?authuser=0

Ali Mohammadi

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

Danish Finance Institute ( email )

Royal Institute of Technology (KTH) - Center of Excellence for Science and Innovation Studies ( email )

Drottning Kristinas väg 30
Stockholm, SE-100 44
Sweden

Simona Zambelli (Contact Author)

University of Florence ( email )

Department of Economics and Management
Via delle Pandette 9
FIRENZE, FI 50127
Italy

HOME PAGE: http://https://www.unifi.it/p-doc2-0-0-A-3f2c352f362e31.html

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