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Does Venture Capital Syndication Spur Employment Growth and Shareholder Value? Evidence from German IPO Data

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  • Erik E. Lehmann

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Abstract

This study examines empirically the syndication of equity by multiple venture capitalists in Germany. Following the literature, there are mainly two competing views as to why venture capitalists syndicate investments. First, syndication can be viewed as a means of risk-sharing. Second, venture capitalists may provide important productive resources to firms, capital and information. We test hypotheses based on these two aspects. The results show that the syndication of equity and the number of venture capitalists involved cannot be fully explained by firm characteristics like size, age or industry affiliation. Although syndicated investments do not differ significantly in stock-market performance, they show significantly higher growth rates.

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  • Erik E. Lehmann, 2004. "Does Venture Capital Syndication Spur Employment Growth and Shareholder Value? Evidence from German IPO Data," Papers on Entrepreneurship, Growth and Public Policy 2004-21, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  • Handle: RePEc:esi:egpdis:2004-21
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    1. repec:kap:sbusec:v:50:y:2018:i:2:d:10.1007_s11187-016-9831-9 is not listed on IDEAS
    2. Younghoon Kim & Yeonbae Kim & Jeong‐Dong Lee, 2011. "Corporate Venture Capital and Its Contribution to Intermediate Goods Firms in South Korea," Asian Economic Journal, East Asian Economic Association, vol. 25(3), pages 309-329, September.
    3. Haizhi Wang & Robert Wuebker & Shu Han & Michael Ensley, 2012. "Strategic alliances by venture capital backed firms: an empirical examination," Small Business Economics, Springer, vol. 38(2), pages 179-196, February.
    4. Erik E. Lehmann & Nikolaus Seitz & Katharine Wirsching, 2017. "Smart finance for smart places to foster new venture creation," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 44(1), pages 51-75, March.
    5. repec:ebl:ecbull:eb-16-00421 is not listed on IDEAS
    6. repec:eee:respol:v:47:y:2018:i:1:p:49-60 is not listed on IDEAS

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    Keywords

    Capital; Human Capital; Syndication; Firm Performance;

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