Management Papers

Document Type

Journal Article

Date of this Version

3-2015

Publication Source

Journal of Business Venturing

Volume

30

Issue

2

Start Page

338

Last Page

354

DOI

10.1016/j.jbusvent.2014.09.001

Abstract

We document the role of entrepreneurial founder and venture capital (VC) partner co-ethnicity in shaping investment relationships. Co-ethnicity increases the likelihood that a VC firm invests in a company. Conditional on investment, co-ethnicity strengthens the degree of involvement by raising the likelihood of VC board of director involvement and increasing the size and scope of investment. These results are consistent with trust and social-network based mechanisms. Shared ethnicity in our sample is associated with worse investment outcomes as measured by investment liquidity, however, which our results suggest might stem from looser screening and/or corporate governance.

Copyright/Permission Statement

© 2015. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.

Keywords

venture capital, ethnic matching

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Date Posted: 27 November 2017

This document has been peer reviewed.