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The role of foreign and domestic venture capital in innovation: evidence from China

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  • Jiangjing Que
  • Xueyong Zhang

Abstract

This paper analyses the different effects of foreign venture capital (FVC) and domestic venture capital (DVC) on innovation for IPOs. Using patent counts to measure innovation, the results indicate that FVC‐backed firms are less innovative than DVC‐backed firms. Our findings are robust after controlling for the sample selection bias using a propensity score matching approach. One possible underlying mechanism through which FVCs nurture less innovation is their inferior geographic proximity to investment targets.

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  • Jiangjing Que & Xueyong Zhang, 2020. "The role of foreign and domestic venture capital in innovation: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 1077-1110, April.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:s1:p:1077-1110
    DOI: 10.1111/acfi.12401
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