| Local Legal System Quality and Syndication Strategy: Cross-border Venture Capital Investments in China |
Received:October 18, 2017 Revised:October 18, 2017 |
Key Words: Legal system; venture capital; cross-border syndicates; China |
| Author Name | Affiliation | | Jing Zhang | Old Dominion University | | Wei Zhang* | Tsinghua University |
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Abstract: |
| We investigate how venture capital investors (VCs) apply syndication strategy to deal with high legal uncertainty when investing overseas. Using the data of VC investment deals in China during 1997-2008, we find that western VCs pursue a lower level of investment activities in a province where the legal system quality is lower. However, syndication with East Asian partners may help reduce the environmental constraint, and improve investment performance. The influences can substitute for or even surpass those from Chinese partners. Our study extends the traditional bi-polar classification of “foreign” versus “local” partners by including partners from third countries. |
