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Endogenous networks in investment syndication

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  • Wang, Lanfang
  • Wang, Susheng

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.

Suggested Citation

  • Wang, Lanfang & Wang, Susheng, 2012. "Endogenous networks in investment syndication," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 640-663.
    • Handle: RePEc:eee:corfin:v:18:y:2012:i:3:p:640-663
    DOI: 10.1016/j.jcorpfin.2012.03.004
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    More about this item

    Keywords

    Investment syndication; Endogenous network; Investment risk; Risk aversion; Project productivity;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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