Journal article
The importance of trust for investment: evidence from venture capital
- Abstract:
- We examine the effect of trust in venture capital. Our theory predicts a positive relationship of trust with investment, but a negative relationship with success. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations positively predicts venture capital firms’ investment decisions, but that it has a negative correlation with successful exits. Our theory also predicts that earlier stage investments require higher trust, that syndication is more valuable in low trust situations, and that higher trust investors use more contingent contracts. The empirical evidence supports these predictions.
- Publication status:
- Published
- Peer review status:
- Peer reviewed
Actions
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- Files:
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(Preview, Accepted manuscript, pdf, 401.9KB, Terms of use)
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(Preview, Accepted manuscript, pdf, 352.5KB, Terms of use)
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- Publisher copy:
- 10.1093/rfs/hhw023
Authors
- Publisher:
- Oxford University Press
- Journal:
- Review of Financial Studies More from this journal
- Volume:
- 29
- Issue:
- 9
- Pages:
- 2283-2318
- Publication date:
- 2016-05-24
- Acceptance date:
- 2016-03-15
- DOI:
- EISSN:
-
1465-7368
- ISSN:
-
0893-9454
- Pubs id:
-
pubs:610194
- UUID:
-
uuid:9b206626-115a-441e-8629-4b996d0b718f
- Local pid:
-
pubs:610194
- Source identifiers:
-
610194
- Deposit date:
-
2016-03-16
Terms of use
- Copyright holder:
- Bottazzi et al
- Copyright date:
- 2016
- Notes:
- Copyright © The Author 2016. Published by Oxford University Press on behalf of The Society for Financial Studies. This is the accepted manuscript version of the article. The final version is available online from Oxford University Press at: https://doi.org/10.1093/rfs/hhw023
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