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Learning and Signalling in The French and German Venture Capital Industries

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Author Info
Stolpe, Michael () (Kiel institute for World Economics)

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Abstract

This paper analyses the efficiency of venture capital and its impact on primary equity markets in France and Germany. It shows that venture capital operates according to the signalling model in France and according to the learning model in Germany. Only the learning model can serve as a rationale for government subsidies. In the signalling model, many young venture capital firms succeed without a protected learning period because they already excel in the screening, monitoring and management supporting services they provide. They will seek to signal their quality to outsiders by taking portfolio firms public early. A variety of empirical tests and policy implications are discussed

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Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 24.

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Date of creation: 2003
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Handle: RePEc:dgr:unutaf:eifc03-24

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Keywords: venture capital; financial markets; France; Germany;

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  1. Georg Gebhardt & Klaus M. Schmidt, 2002. "Der Markt für Venture Capital: Anreizprobleme, Governance Strukturen und staatliche Interventionen," Perspektiven der Wirtschaftspolitik, Blackwell Publishing, vol. 3(3), pages 235-255, 08. [Downloadable!] (restricted)
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  2. Boyan Jovanovic & Peter L. Rousseau, 2001. "Why Wait? A Century of Life before IPO," American Economic Review, American Economic Association, vol. 91(2), pages 336-341, May. [Downloadable!] (restricted)
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  3. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March. [Downloadable!] (restricted)
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  5. Megginson, William L & Weiss, Kathleen A, 1991. " Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July. [Downloadable!] (restricted)
  6. Franklin Allen, . "Stock Markets and Resource Allocation (Reprint 036)," Rodney L. White Center for Financial Research Working Papers 15-92, Wharton School Rodney L. White Center for Financial Research.
  7. Lerner, Joshua, 1994. "Venture capitalists and the decision to go public," Journal of Financial Economics, Elsevier, vol. 35(3), pages 293-316, June. [Downloadable!] (restricted)
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  14. Richard Blundell & Steve Bond & Frank Windmeijer, 2000. "Estimation in dynamic panel data models: improving on the performance of the standard GMM estimator," IFS Working Papers W00/12, Institute for Fiscal Studies. [Downloadable!]
  15. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July. [Downloadable!] (restricted)
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  18. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August. [Downloadable!] (restricted)
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  19. Audretsch, David B & Elston, Julie A, 1997. " Financing the German Mittelstand," Small Business Economics, Springer, vol. 9(2), pages 97-110, April. [Downloadable!] (restricted)
  20. Ljungqvist, Alexander P & Wilhelm Jr, William J, 2001. "The Seven Percent Solution? An International Perspective On Underwriting Spreads," CEPR Discussion Papers 2736, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  21. Samuel Kortum & Josh Lerner, 2000. "Assessing the Contribution of Venture Capital to Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 674-692, Winter.
  22. Gibbons, R. & Murphy, K.J., 1990. "Optimal Incentive Contracts In The Presence Of Career Concerns: Theory And Evidence," Working papers 563, Massachusetts Institute of Technology (MIT), Department of Economics.
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  23. John H. Cochrane, 2001. "The Risk and Return of Venture Capital," NBER Working Papers 8066, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  24. Hellmann, Thomas & Puri, Manju, 2000. "The Interaction between Product Market and Financing Strategy: The Role of Venture Capital," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 13(4), pages 959-84.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Stolpe, 2004. "Non-Market Interaction in Primary Equity Markets: Evidence from France and Germany," Kiel Working Papers 1211, Kiel Institute for the World Economy. [Downloadable!]
  2. Michael Stolpe, 2004. "Europe's Entry into the Venture Capital Business: Efficiency and Policy," Kiel Working Papers 1223, Kiel Institute for the World Economy. [Downloadable!]
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