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Dialect Distance and Venture Capital Risk‐Taking: Evidence From China

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  • Jianjun Li
  • Ji Wu
  • Tairan Kevin Huang
  • Yu Guo

Abstract

This study investigates how dialect distance affects venture capital (VC) firms' risk‐taking behaviour in China. Using data from 29,208 investment rounds between 2000 and 2018, we find that longer dialect distance reduces VC investment in early‐stage portfolio companies due to strengthening information asymmetry concerns and building trust barriers. However, the negative effect is weakened by factors such as VC managers' experience, high‐speed rail connectivity, regional quality of law enforcement, joint investments, central network position, and higher portfolio company patent activity. Our results highlight dialect distance as a significant obstacle to cross‐regional VC investments in China.

Suggested Citation

  • Jianjun Li & Ji Wu & Tairan Kevin Huang & Yu Guo, 2025. "Dialect Distance and Venture Capital Risk‐Taking: Evidence From China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(5), pages 4352-4369, December.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:5:p:4352-4369
    DOI: 10.1111/acfi.70073
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