Venture Capital Networks and Investment Performance in China

Zhiyang Liu () and Zhiqi Chen
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Zhiyang Liu: Shanghai University of Finance and Economics

No 14-12, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We investigate the relationship between venture capital (VC) networks and investment performance in China. Distinct features of China’s VC networks are captured in our econometric model through the inclusion of an index of network stability and a dummy variable that indicates a VC firm’s connections with the Chinese state. Our econometric analysis shows that a VC firm’s position in its network, its network stability and close connections with the state all contribute to its investment performance. Comparison with the findings in Hochberg et al. (2007) indicates that networks are more important for investment performance in China than in the US. Moreover, our analysis suggests that familiarity with local culture and customs and understanding of the idiosyncrasies of China’s markets and institutions are important for the success of a VC firm in China.

Keywords: Venture capital; Networks; Investment performance; China (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-09
New Economics Papers: this item is included in nep-bec, nep-cna, nep-ent, nep-net and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published: Carleton Economic Papers

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Journal Article: Venture Capital Networks and Investment Performance in China (2014)
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