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Does religiosity influence venture capital investment decisions?

Justin Chircop, Sofia Johan and Monika Tarsalewska

Journal of Corporate Finance, 2020, vol. 62, issue C

Abstract: Theories on contextual behavior (e.g., social norm, self-identity, and legitimacy theories) suggest that the religiosity of the geographical area in which an organization operates influences its behavior. Using a sample of 91,020 VC investments in the U.S., we study whether religiosity influences VC investment decisions. Based on prior literature that finds a positive relation between religiosity and risk aversion, we posit that VCs located in more religious counties make less risky investments. We find that VCs located in more religious areas are more likely to be involved in staging and syndication and have a greater propensity to invest in later and expansion stages of portfolio companies. Taken together, our results suggest that VCs located in religious counties tend to be more risk averse.

Keywords: Religiosity; Venture capital; Risk aversion (search for similar items in EconPapers)
JEL-codes: D83 G20 G24 L14 M13 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.jcorpfin.2020.101589

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