Venture capital investment and institutional factors: Evidence from China

Tianyi Song and Kenji Kutsuna

Research in International Business and Finance, 2023, vol. 65, issue C

Abstract: This paper examines how venture capital (VC) investment and institutional factors affect the performance of VC-backed companies in China. Compared with non-VC-backed companies, we find that VC-backed companies slightly underperform in profitability but have considerably higher market value. Furthermore, VC investment does not help companies mitigate the negative impact of institutional factors on profitability; however, it conveys beneficial effects that help companies moderate the negative impact on market value. We also provide evidence that the impact of VC investment and institutional factors is more pronounced for non-state-owned companies, companies with poor corporate governance, and companies with higher research and development investment.

Keywords: Venture capital; Institutional factors; Investment strategy; Company performance; China (search for similar items in EconPapers)
JEL-codes: G24 G30 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000867

DOI: 10.1016/j.ribaf.2023.101960

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