1、中文 3800 字 出处： Journal of Corporate Finance， Volume 12, Issue 2, January 2006, Pages 214-245 文献 ： Legality and venture capital exits1 Douglas Cumming， ， Grant Fleming and Armin Schwienbacher Abstract This paper introduces an analysis of the impact of Legality on the exiting of venture capital investm
2、ents. We consider a sample of 468 venture-backed companies from 12 Asia-Pacific countries, and these countries venture capitalists investments in US-based entrepreneurial firms. The data indicate IPOs are more likely in countries with a higher Legality index. This core result is robust to controls f
3、or country-specific stock market capitalization, MSCI market conditions, venture capitalist fund manager skill and fund characteristics, and entrepreneurial firm and transaction characteristics. Although Black and Gilson (1998) Black, B.S., Gilson, R.J., 1998. Venture capital and the structure of ca
4、pital markets: banks versus stock markets. Journal of Financial Economics 47, 24377 speculate on a central connection between active stock markets and active venture capital markets, our data in fact indicate the quality of a countrys legal system is much more directly connected to facilitating VC-b
5、acked IPO exits than the size of a countrys stock market. The data indicate Legality is a central mechanism which mitigates agency problems between outside shareholders and entrepreneurs, thereby fostering the mutual development of IPO markets and venture capital markets. Keywords: venture capital；
6、exits ； IPO； acquisition； law and finance 1 Journal of Corporate Finance， Volume 12, Issue 2, January 2006, Pages 214-245 1. introduction The risks and returns to investing in small private companies and companies with intangible assets are pronounced.3 This is especially the case in smaller and les
7、s developed finance markets such as those in the Asia-Pacific region. The legal rights and protections afforded to entrepreneurs and investors are particularly important in venture capital and private equity markets. Legal structures impact the rights and protections of parties and distribution of f
8、inancial outcomes under various states of the world. That law matters in many aspects of finance is widely recognized, with studies showing that legal institutions and rules influence capital structure, dividend payout ratios, repurchasing decisions, and capital market returns.4 Much of this literat
9、ure, however, concentrates on publicly traded companies. The impact of legal institutions and structures on private equity investments (such as those undertaken by venture capitalists) has received less attention. The exit process is of central interest because venture capital investments typically
10、do not pay dividends； rather, returns are derived from capital gains upon exit. In fact, a venture capitalists decision to invest typically depends on exit potential. Where laws impact exit, they also impact the decision to invest and therefore the entire development of a venture capital market. Pri
11、or work has not considered private equity exits in more than one or two countries simultaneously, and hence has been unable to fully address the question of how Legality impacts private equity markets. 2.1. Legality and venture capital exits There are five principal venture capital exit vehicles (se
12、e, e.g., Black and Gilson, 1998, and Cumming and MacIntosh, 2003a and Cumming and MacIntosh, 2003b, for discussion): (1) initial public offerings (IPOs)the entrepreneurial firm is listed on a stock exchange for the first time； (2) acquisitions (or trade sales)the company is purchased by a larger fir
13、m, typically a strategic acquiror, and both the venture capitalist and entrepreneurs sell their interest in the company； (3) secondary salesthe venture capital fund sells its interest, but the entrepreneurs do not sell their interest, to another firm or venture capital fund； (4) buybacksthe entrepre
14、neurs repurchase their interest from the venture capital fund； and (5) write-offs (or liquidation)the investors walk away from the investment with little or no return. In this paper we introduce the term private exit to refer to the group of acquisitions, secondary sales and buybacks. In some instan
15、ces in this dataset, we are able to observe when there has been a private exit, but not the specific type of private exit. 2.2. Economic and governance factors affecting venture capital exits In addition to country legal factors, a variety of other variables may influence the exit outcome of a VC ba
16、cked company, including market conditions and market capitalization, VC fund and entrepreneur characteristics, and transaction-specific characteristics. We briefly discuss each in turn in this subsection. Two important types of market variables can affect exit outcomes of VC-backed companies. First,
17、 it is well known that favorable stock market returns and bubble periods increase the probability of IPO outcomes, and therefore we control for country-specific MSCI indices, as well as the Internet bubble in our sample. Second, the country-specific stock market capitalization can increase the proba
18、bility of IPO exits.9 Black and Gilson (1998) argue that the development of the public equity market permits VCs to exit through an IPO, which itself is critical to the development of the venture capital market. Thus, it is reasonable to assume that the development of the public equity market is lin
19、ked to the choice of the exit process for venture capitalists. At the same time, La Porta et al., 1997 and La Porta et al., 1998 document countries with better legal protection of shareholder rights have more developed and bigger equity markets. The exit choice and the development of legal systems m
20、ay be linked together not because better shareholder protection laws result in lower agency costs between entrepreneurs and outside shareholders and foster IPO activity but because both variables are correlated with the development of stock markets. Therefore, it is important to control for the size
21、 of a countrys equity market in order to understand the relationship between the VCs exit choice and the legal system. It is further important to control for VC fund characteristics in assessing VC exit outcomes.10 Hsu (2004) shows that entrepreneurial firms chose specific VCs in order to signal the
22、ir quality and lower the information asymmetries between themselves and market participants. In our empirics, we control for a large number of factors pertaining to VC fund characteristics, including limited partnership VCs versus captive VCs, fund capital, fund manager experience, US-affiliated funds, and sector or stage specialization of the fund. We expect these proxies for greater fund
