The importance of trust for investment: evidence from venture capital
We examine the effect of trust in venture capital. Our theory predicts a positive relationship of trust with investment, but a negative relationship with success. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations positivel...
| Main Authors: | , , |
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| Format: | Journal article |
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Oxford University Press
2016
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| _version_ | 1797084337751982080 |
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| author | Bottazzi, L Da Rin, M Hellmann, T |
| author_facet | Bottazzi, L Da Rin, M Hellmann, T |
| author_sort | Bottazzi, L |
| collection | OXFORD |
| description | We examine the effect of trust in venture capital. Our theory predicts a positive relationship of trust with investment, but a negative relationship with success. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations positively predicts venture capital firms’ investment decisions, but that it has a negative correlation with successful exits. Our theory also predicts that earlier stage investments require higher trust, that syndication is more valuable in low trust situations, and that higher trust investors use more contingent contracts. The empirical evidence supports these predictions. |
| first_indexed | 2024-03-07T01:54:05Z |
| format | Journal article |
| id | oxford-uuid:9b206626-115a-441e-8629-4b996d0b718f |
| institution | University of Oxford |
| last_indexed | 2024-03-07T01:54:05Z |
| publishDate | 2016 |
| publisher | Oxford University Press |
| record_format | dspace |
| spelling | oxford-uuid:9b206626-115a-441e-8629-4b996d0b718f2022-03-27T00:26:27ZThe importance of trust for investment: evidence from venture capitalJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:9b206626-115a-441e-8629-4b996d0b718fSymplectic Elements at OxfordOxford University Press2016Bottazzi, LDa Rin, MHellmann, TWe examine the effect of trust in venture capital. Our theory predicts a positive relationship of trust with investment, but a negative relationship with success. Using a hand-collected dataset of European venture capital deals, we find that the Eurobarometer measure of trust among nations positively predicts venture capital firms’ investment decisions, but that it has a negative correlation with successful exits. Our theory also predicts that earlier stage investments require higher trust, that syndication is more valuable in low trust situations, and that higher trust investors use more contingent contracts. The empirical evidence supports these predictions. |
| spellingShingle | Bottazzi, L Da Rin, M Hellmann, T The importance of trust for investment: evidence from venture capital |
| title | The importance of trust for investment: evidence from venture capital |
| title_full | The importance of trust for investment: evidence from venture capital |
| title_fullStr | The importance of trust for investment: evidence from venture capital |
| title_full_unstemmed | The importance of trust for investment: evidence from venture capital |
| title_short | The importance of trust for investment: evidence from venture capital |
| title_sort | importance of trust for investment evidence from venture capital |
| work_keys_str_mv | AT bottazzil theimportanceoftrustforinvestmentevidencefromventurecapital AT darinm theimportanceoftrustforinvestmentevidencefromventurecapital AT hellmannt theimportanceoftrustforinvestmentevidencefromventurecapital AT bottazzil importanceoftrustforinvestmentevidencefromventurecapital AT darinm importanceoftrustforinvestmentevidencefromventurecapital AT hellmannt importanceoftrustforinvestmentevidencefromventurecapital |