Law and Corruption in Venture Capital and Private Equity

  • Douglas Cumming
  • Grant Fleming
  • Sofia Johan
  • Dorra Najar
Chapter
Part of the Advances in Business Ethics Research book series (ABER, volume 3)

Abstract

This chapter summarizes recent research on the role of law, culture and corruption on venture capital (VC) fund structure, governance and performance. Evidence from studies that involve a multitude of countries is primarily considered. The evidence across most studies is broadly consistent with the view that legal protection enables superior compensation arrangements in limited partnerships where the interests of general partners and limited partners is aligned. More corrupt countries, by contrast, have less efficient compensation structures. The evidence further indicates that better legal systems facilitate contract performance. Finally, the evidence show countries with higher levels of corruption have higher levels of returns, suggesting that fund managers are able to alleviate the effects of corruption in investee companies. In our concluding comments we discuss venture capital around the world and its future development in relation to law, corruption and culture.

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Copyright information

© Springer Science + Business Media Dordrecht. 2013

Authors and Affiliations

  • Douglas Cumming
    • 1
  • Grant Fleming
    • 2
  • Sofia Johan
    • 1
  • Dorra Najar
    • 3
  1. 1.Schulich School of BusinessYork UniversityTorontoCanada
  2. 2.Continuity Capital PartnersCanberraAustralia
  3. 3.Universisté Paris Dauphine and IPAG Business SchoolParisFrance

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