Do networks of financial intermediaries help reduce local bias? Evidence from cross-border venture capital exits

Jääskeläinen, Mikko; Maula, Markku

doi:10.1016/j.jbusvent.2013.09.001

Cited by 82 publications

(41 citation statements)

References 96 publications

(115 reference statements)

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“…We measure geographic distance between two markets using their capital cities (Dai et al, 2012;Jääskeläinen & Maula, 2014). The variable Geo Dist is the log of the great-circle distance (in kilometers and plus one) between the capital cities of two particular markets.…”

Section: Geographic Distancementioning

confidence: 99%

“…Traditionally, the focus has been on trying to understand the effects of distances between home and destination markets on the international expansion of multinational firms (Tihanyi, Griffith, & Russell, 2005;Xu & Shenkar, 2002). More recently, the effects of national distances on other types of investments, such as venture capital (VC), have also attracted some scholarly attention (Dai & Nahata, 2016;Jääskeläinen & Maula, 2014;Nahata, Hazarika, & Tandon, 2014).…”

Section: Introductionmentioning

confidence: 99%

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The interplay of national distances and regional networks: Private equity investments in emerging markets

2018

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Integrating social network theory with the literature on national distance, we examine how the investment strategy followed by a private equity (PE) firm in an emerging market is affected by the interplay between two important types of national distances-institutional and geographic-and the firm's centrality in the regional syndication network. Covering over 5,000 investment transactions, we use a dataset of more than 500 PE firms based in both developed and emerging markets targeting three emerging market regions-Latin America, Southeast Asia, and Eastern Europe-from 1996 to 2011. The results show that, depending on the level of centrality of PE firms in regional syndication networks, institutional and geographic distances can have differing effects-both in magnitude and direction-on their investment strategies in emerging markets. Moreover, these effects are contingent on whether the PE firm is from a developed market or an emerging market. We conclude that different types of national distances can operate in dissimilar ways depending on (1) firm-level factors defined at the regional levelsuch as centrality in the regional syndication network-and (2) the developed market or emerging market nature of the PE firm.

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Section: Geographic Distancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The interplay of national distances and regional networks: Private equity investments in emerging markets

2018

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“…Jääskeläinen and Maula () focus on network distances of internationally syndicated deals. They show that a venture that has more non‐domestic network ties is more likely to exit in a foreign market.…”

Section: Literature Review and Development Of Hypothesesmentioning

confidence: 99%

“…Nevertheless, they do not incorporate the exit dynamics of the transactions in their analyses. Jääskeläinen and Maula (2013) focus on network distances of internationally syndicated deals. They show that a venture that has more non-domestic network ties is more likely to exit in a foreign market.…”

Section: Literature Review and Development Of Hypothesesmentioning

confidence: 99%

Cross‐Border Investments and Venture Capital Exits inEurope

Bertoni¹,

Groh²

2014

Corporate Governance

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Manuscript Type Empirical Research Question/Issue We examine the way in which the exit mode (i.e., initial public offering – IPO, trade sale, or write‐off) of venture capital (VC) investments is influenced by the additional exit opportunities brought by cross‐border VC investors. Research Findings/Insights We perform our analysis on a sample of 1,062 VC investments in 462 young high‐tech companies in seven European countries. Our findings indicate that, controlling for firm performance, investor characteristics, and local exit conditions, the probability of exiting via trade sale is positively correlated to the additional set of mergers and acquisitions (M&A) opportunities brought by cross‐border investors. A similar effect, but with weaker statistical significance, is also identified for exits by IPO, which are positively affected by IPO volumes in the countries of cross‐border investors. Theoretical/Academic Implications Cross‐border VC investment may, at least partially, compensate for inadequate local exit conditions. Cross‐border investors can spillover the capital market activity of their home country and enhance exit options for young ventures. International syndicates are also quicker to write off their non‐performing investments. Practitioner/Policy Implications Not all exit modes are equally affected by international syndication. The impact of cross‐border investors on the exit mode also depends on their country of origin and, more specifically, on the exit opportunities available there. The mechanism is stronger for trade sales than for IPOs.

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“…In the context of this literature, our study builds on the existing research about the ways in which exit performance is affected by geographic distances, cultural/ethnic disparities, and institutional differences between the locations of US VC providers and those of their portfolio companies (Chen et al 2010;Cumming and Dai 2010;Bengtsson and Hsu 2015) and between the locations of international VC providers and their portfolio companies (Nahata et al 2014;Dai and Nahata 2016). Our study is also related to the literature on syndication and networks in cross-border investments (Hursti and Maula 2007;Guler and Guillén 2010;Meuleman and Wright 2011;Jääskeläinen and Maula 2014;Reuer and Ragozzino 2014;Hain et al 2015;Chemmanur, Hull, and Krishnan 2016;Meuleman, Jääskeläinen, Maula, and Wright 2017).…”

Section: Introductionmentioning

confidence: 96%