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Ethnic matching in the US venture capital market

Bengtsson, Ola LU and Hsu, David H. (2015) In Journal of Business Venturing 30(2). p.338-354
Abstract
We document the role of entrepreneurial founder and venture capital (VC) partner co-ethnicity in shaping investment relationships. Co-ethnicity increases the likelihood that a VC firm invests in a company. Conditional on investment, co-ethnicity strengthens the degree of involvement by raising the likelihood of VC board of director involvement and increasing the size and scope of investment. These results are consistent with trust and social-network based mechanisms. Shared ethnicity in our sample is associated with worse investment outcomes as measured by investment liquidity, however, which our results suggest might stem from looser screening and/or corporate governance. (c) 2014 Elsevier Inc. All rights reserved.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Venture capital, Ethnic matching
in
Journal of Business Venturing
volume
30
issue
2
pages
338 - 354
publisher
Elsevier
external identifiers
  • wos:000350923500009
  • scopus:84925183152
ISSN
0883-9026
DOI
10.1016/j.jbusvent.2014.09.001
language
English
LU publication?
yes
id
9af1758f-e1c9-4348-b638-b5c2ffcb5924 (old id 5297188)
date added to LUP
2015-04-24 14:37:48
date last changed
2017-08-27 03:01:49
@article{9af1758f-e1c9-4348-b638-b5c2ffcb5924,
  abstract     = {We document the role of entrepreneurial founder and venture capital (VC) partner co-ethnicity in shaping investment relationships. Co-ethnicity increases the likelihood that a VC firm invests in a company. Conditional on investment, co-ethnicity strengthens the degree of involvement by raising the likelihood of VC board of director involvement and increasing the size and scope of investment. These results are consistent with trust and social-network based mechanisms. Shared ethnicity in our sample is associated with worse investment outcomes as measured by investment liquidity, however, which our results suggest might stem from looser screening and/or corporate governance. (c) 2014 Elsevier Inc. All rights reserved.},
  author       = {Bengtsson, Ola and Hsu, David H.},
  issn         = {0883-9026},
  keyword      = {Venture capital,Ethnic matching},
  language     = {eng},
  number       = {2},
  pages        = {338--354},
  publisher    = {Elsevier},
  series       = {Journal of Business Venturing},
  title        = {Ethnic matching in the US venture capital market},
  url          = {http://dx.doi.org/10.1016/j.jbusvent.2014.09.001},
  volume       = {30},
  year         = {2015},
}