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When are venture capital projects initiated?

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  • Li, Yong
  • Mahoney, Joseph T.
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    Abstract

    This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. This delay effect of market volatility is reduced if the target industry experiences high sales growth or if competition among venture capitalists is intense in the target industry. The paper provides further evidence to corroborate the view that venture capitalists rationally respond to market shifts in their investment decisions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Venturing.

    Volume (Year): 26 (2011)
    Issue (Month): 2 (March)
    Pages: 239-254

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    Handle: RePEc:eee:jbvent:v:26:y:2011:i:2:p:239-254

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

    Related research

    Keywords: Venture capital Real options Investment timing Uncertainty Growth Competition;

    References

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    Cited by:
    1. Li, Yong & Vertinsky, Ilan B. & Li, Jing, 2014. "National distances, international experience, and venture capital investment performance," Journal of Business Venturing, Elsevier, Elsevier, vol. 29(4), pages 471-489.

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