Venture Capital and Corporate Governance

Franklin Allen and Wei-ling Song

Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania

Abstract: We consider data from 16 Asian countries, 16 European countries and the US to investigate the relationship between venture capital and corporate governance. There are five main findings. First, the variable measuring law and order is negatively related to the importance of venture capital finance. Second, the allocation of investment across different stages and different industries depends more on macroeconomic factors than on corporate governance variables. Third, in Low-GDP countries the allocation of venture capital is greater for low technology industries than for high technology industries. Fourth, venture capital boomed and became significant in many countries during the stock market boom or "bubble" of the late 1990's. Finally, a comparison of Asian and European venture capital shows that in Asia there was more investment in early stage projects while in Europe there was more investment in late stage projects. Also, in Europe there was more investment in medical and biotechnology industries.

Date: 2002-09
New Economics Papers: this item is included in nep-ent and nep-mfd
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Citations: View citations in EconPapers (4)

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