Law and Corruption in Venture Capital and Private Equity
Cumming, Douglas; Fleming, Grant; Johan, Sofia; Najar, Dorra (2013), Law and Corruption in Venture Capital and Private Equity, in Cressy, Robert; Cumming, Douglas; Mallin, Chris, Entrepreneurship, Finance, Governance and Ethics, Springer : Berlin, p. 87-110. http://dx.doi.org/10.1007/978-94-007-3867-6_5
Book titleEntrepreneurship, Finance, Governance and Ethics
Book authorCressy, Robert; Cumming, Douglas; Mallin, Chris
Number of pages455
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Abstract (EN)This chapter summarizes recent research on the role of law, culture and corruption on venture capital (VC) fund structure, governance and performance. Evidence from studies that involve a multitude of countries is primarily considered. The evidence across most studies is broadly consistent with the view that legal protection enables superior compensation arrangements in limited partnerships where the interests of general partners and limited partners is aligned. More corrupt countries, by contrast, have less efficient compensation structures. The evidence further indicates that better legal systems facilitate contract performance. Finally, the evidence show countries with higher levels of corruption have higher levels of returns, suggesting that fund managers are able to alleviate the effects of corruption in investee companies. In our concluding comments we discuss venture capital around the world and its future development in relation to law, corruption and culture.
Subjects / KeywordsEthics; Entrepreneurship
JELL25 - Firm Performance: Size, Diversification, and Scope
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
K22 - Business and Securities Law
M14 - Corporate Culture; Diversity; Social Responsibility
L22 - Firm Organization and Market Structure
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