The role of venture capital in merger and acquisition performance. Issue 6 (30th March 2023)

• Record Type: Journal Article
• Authors: Song, He; Wan, Shan
• Is Part Of: Applied economics letters. Volume 30:Issue 6(2023)
• Page Start: 822
• Page End: 826
• Publication Date: 2023-03-30
• Subjects: Merger and acquisition performance -- venture capital -- information asymmetry -- China; G14 -- G24 -- G34; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2021.2024492
• Languages: English
• ISSNs: 1350-4851

Abstract

ABSTRACT: We examine the effects of venture capital (VC) backing on the market responses to M&A events among a group of Chinese firms listed on ChiNext. We find a positive market response to M&A carried out by the companies backed by venture capital and this effect is robust after we address the endogeneity by employing Heckman two-stage approach. Our results support the notion that the involvement of VCs in their portfolio companies alleviates the information asymmetry problem.