Institutional environment and financing costs: Evidence from venture capital backed transactions

Qing Liang, Christopher Gan and Zhaohua Li

Finance Research Letters, 2019, vol. 31, issue C

Abstract: This study examines the financing cost enterprises confront when seeking backing from venture capitalists (VC) in different institutional settings related to proxy voting rights. Using a sociological perspective, we have developed new indexes for proxy voting rights from 28 countries. Examining 2598 VC-backed financing deals over the period of 1997 to 2016, we find that proxy voting rights significantly reduce enterprises’ financing costs. Our findings are robust to a number of checks after addressing endogeneity concerns.

Keywords: Venture capital; Proxy voting rights; Financing costs (search for similar items in EconPapers)
JEL-codes: G23 K40 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:31:y:2019:i:c:s1544612318307694

DOI: 10.1016/j.frl.2018.11.018

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