The foreign experience and investment performance of venture capitalists

Lin Zhang and Xueyong Zhang

Accounting and Finance, 2022, vol. 62, issue S1, 1675-1714

Abstract: This study examines the impact of venture capitalists with foreign experience on investment performance. Based on venture capitalist‐ and deal‐level samples, venture capitalists with foreign experience are found to yield significantly worse investment performance than those with domestic experience in China. The study findings hold across a wide range of robustness checks. Further results indicate that venture capitalists with foreign experience are more prone to follow prudent investing strategies, invest shortly before exiting and conduct less supervision. One underlying mechanism through which venture capitalists with foreign experience yield poorer performances is cultural distance.

Date: 2022
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