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Endogenous networks in investment syndication

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  • Wang, Lanfang
  • Wang, Susheng
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    Abstract

    As an effective investment strategy, investors often invest jointly in a company by forming a syndicate. The unique feature of this paper is that it endogenizes the formation of an investment syndicate. We provide a theory on the endogenous formation of networks in investment syndication and analyze how several key factors such as risk aversion, productivity, risk and cost affect incentive and syndicated investment. We also apply the theory to venture capital investment and identify empirical evidence in support of it.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0929119912000351
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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 18 (2012)
    Issue (Month): 3 ()
    Pages: 640-663

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    Handle: RePEc:eee:corfin:v:18:y:2012:i:3:p:640-663

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    Web page: http://www.elsevier.com/locate/jcorpfin

    Related research

    Keywords: Investment syndication; Endogenous network; Investment risk; Risk aversion; Project productivity;

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    References

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    Cited by:
    1. Cumming, Douglas & Li, Dan, 2013. "Public policy, entrepreneurship, and venture capital in the United States," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 345-367.
    2. Humphery-Jenner, Mark & Suchard, Jo-Ann, 2013. "Foreign VCs and venture success: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 21(C), pages 16-35.

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