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Venture Capital Investments, Merger Activity, and Competition Laws around the World

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  • Gordon M Phillips
  • Alexei Zhdanov

Abstract

We examine the relation between venture capital (VC) investments, M&A activity, and merger competition laws in 45 countries around the world. We find evidence of a strong positive association between VC investments and lagged M&A activity, consistent with an active M&A market providing viable exit opportunities for VC companies and therefore incentives for venture capitalists to invest. We also explore the effects of country-level merger competition laws and pro-takeover legislation passed internationally on VC activity. We find significant reductions in VC activity in countries with stricter competition laws and find that VC activity intensifies after the enactment of country-level takeover-friendly legislation. (JEL G15, G24, D43, K21, L26)

Suggested Citation

  • Gordon M Phillips & Alexei Zhdanov, 2024. "Venture Capital Investments, Merger Activity, and Competition Laws around the World," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 13(2), pages 303-334.
    • Handle: RePEc:oup:rcorpf:v:13:y:2024:i:2:p:303-334.
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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