Journal ArticleDOI
Crowding Out Private Equity: Canadian Evidence
TLDR
In this article, the authors examine a Canadian tax-driven vehicle known as the Labour Sponsored Venture Capital Corporation (LSVCC) and suggest that the LSVCCs can be expected to have higher agency costs and lower profitability than private venture capital funds.Abstract:
In this paper, we examine a Canadian tax-driven vehicle known as the Labour Sponsored Venture Capital Corporation (LSVCC). As a theoretical matter, we suggest that the LSVCCs can be expected to have higher agency costs and lower profitability than private venture capital funds. We present data that are consistent with this view. The central question that we analyze, however, is whether the tax advantages conferred on LSVCCs have resulted in LSVCCs crowding out, or displacing other types of venture capital funds. Empirical analysis of our data (which covers the 1977-2001 period) is highly consistent with crowding out. The data suggest that crowding out has been sufficiently energetic as to lead to a reduction in the aggregate pool of venture capital in Canada, frusterating one of the key governmental goals underlying the LSVCC programs; namely, the expansion of the aggregate pool of capital. In the course of our analysis, we confirm the importance of macroeconomic factors (the performance of the stock market, real interest rates, and changes in real gross domestic product) in affecting the supply of and demand for venture capital. We also generate evidence that is consistent with the proposition that entrepreneurs in the market for venture capital prefer to incorporate their business federally, rather than provincially.read more
Citations
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Journal ArticleDOI
A review and road map of entrepreneurial equity financing research
Will Drover,Lowell W. Busenitz,Sharon F. Matusik,David M. Townsend,Aaron H. Anglin,Gary Dushnitsky +5 more
TL;DR: In this paper, the authors take stock of the existing research in venture finance and identify key considerations relevant for the domain of venture finance moving forward, and integrate, organize, and assess the large and disparate literature on venture finance.
Journal ArticleDOI
Local Bias in Venture Capital Investments
Douglas J. Cumming,Na Dai +1 more
TL;DR: In this paper, the authors examine local bias in the context of venture capital investments and find that more reputable VCs (older, larger, more experienced, and with stronger IPO track record) and VCs with broader networks exhibit less local bias.
Journal ArticleDOI
Public policy and the creation of active venture capital markets
TL;DR: In this paper, the authors assess the effectiveness of different public policy instruments for the creation of active venture capital markets and find no evidence of a shortage of supply of venture capital funds in Europe.
Journal ArticleDOI
Formal Institutions, Culture, and Venture Capital Activity: A Cross-Country Analysis
Yong Li,Shaker A. Zahra +1 more
TL;DR: In this paper, the authors suggest that the variation in the level of venture capital activity can be attributed to the different levels of formal institutional development and propose that venture capitalists respond differently to the incentives provided by formal institutions depending on different cultural settings.
References
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TL;DR: In this paper, the authors propose a nonlinear regression model based on the Gauss-Newton Regression for least squares, and apply it to time-series data and show that the model can be used for regression models for time series data.
Posted Content
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TL;DR: A theme of the text is the use of artificial regressions for estimation, reference, and specification testing of nonlinear models, including diagnostic tests for parameter constancy, serial correlation, heteroscedasticity, and other types of mis-specification.
Journal ArticleDOI
The structure and governance of venture-capital organizations
TL;DR: The authors describes and analyzes the structure of VC organizations, focusing on the relationship between investors and venture capitalists and between venture-capital firms and the ventures in which they invest, and contrasts VC organizations with large, publicly traded corporations and with leveraged buyout organizations.
Journal ArticleDOI
Venture Capitalist Certification in Initial Public Offerings
TL;DR: In this article, the authors examined whether the presence of venture capitalists, as investors in a firm going public, can certify that the offering price of the issue reflects all available and relevant inside information.
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Introduction to the Theory and Practice of Econometrics
TL;DR: In this article, the authors present an interweaving of inferential approaches and theory and practice in econometrics, and interweave inferential approach and theory in Econometric applications.