Second-tier Stock Exchanges and Growth of High-Tech Entrepreneurship

Abstract

We examine the role of second-tier stock exchanges in high-tech entrepreneurship from a global perspective. Using a country-industry-year panel of 217 countries, we find a significant increase in high-tech entrepreneurial activities following the launches of such markets. This relation is stronger in industries more dependent on second-tier markets ex ante, which supports a causal interpretation, and is stronger in countries whose second-tier markets are more successful ex post. We further show that second-tier stock exchanges promote high-tech entrepreneurship by encouraging talents to become entrepreneurs, by promoting venture investment, and by enhancing the trading of intellectual property. We present comprehensive evidence for the real effects of second-tier stock exchanges in terms of improving domestic entrepreneurship and innovation.

Keywords: entrepreneurship, second-tier stock exchanges, inventors, innovation, intellectual property JEL codes: G15, L26, N20, O34

JEL Classification: G15, L26, N20, O34