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The Importance of Trust for Investment: Evidence from Venture Capital Author info | Abstract | Publisher info | Download info | Related research | Statistics Laura Bottazzi
Marco Da Rin
Thomas Hellmann
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This paper examines the effect of trust in a micro-economic environment, where trust is clearly exogenous. Using a hand-collected data on European venture capital, we show that the Eurobarometer measure of trust among nations significantly affects investment decisions. This holds even after controlling for investor and company fixed effects, geographic distance, information and transaction costs. The national identity of venture capital firms’ partners is shown to matter for the effect of trust. We also considers the relationship between trust and sophisticated contracts involving contingent control rights. We find trust and sophisticated contracts to be complements, not substitutes.
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Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number
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Paper Bottazzi, L. & Da Rin, M. & Hellmann, T., 2009.
"The Importance of Trust for Investment: Evidence from Venture Capital ,"
Discussion Paper
2009-43, Tilburg University, Center for Economic Research.
[Downloadable!] L. Bottazzi & M. Da Rin & T. Hellmann, 2007.
"The Importance of Trust for Investment: Evidence from Venture Capital ,"
Working Papers
612, Dipartimento Scienze Economiche, Universita' di Bologna.
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references 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.)
Bottazzi, L. & Da Rin, M. & Hellmann, T., 2008.
"What is the Role of Legal Systems in Financial Intermediation? Theory and Evidence ,"
Discussion Paper
2008-014, Tilburg University, Tilburg Law and Economic Center.
[Downloadable!]
Other versions:
Bottazzi, L. & Da Rin, M. & Hellmann, T., 2008.
"What is the Role of Legal Systems in Financial Intermediation? Theory and Evidence ,"
Discussion Paper
2008-30, Tilburg University, Center for Economic Research.
[Downloadable!] L. Bottazzi & M. Da Rin & T. Hellmann, 2007.
"What is the Role of Legal Systems in Financial Intermediation? Theory and Evidence ,"
Working Papers
613, Dipartimento Scienze Economiche, Universita' di Bologna.
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