When does corporate venture capital investment create firm value?

Over the past decade, billions of dollars have been invested by established companies in entrepreneurial ventures—what is often referred to as corporate venture capital. Yet, there is little systematic evidence that corporate venture capital investment creates value to investing firms. Scholars have suggested that established firms face underlying challenges when investing corporate venture capital. Namely, structural deficiencies inherent in corporate venture capital may inhibit financial gains. However, firm value may still be created as a result of other benefits from investing—primarily providing a window onto novel technology. In this paper, we propose that corporate venture capital investment will create greater firm value when firms explicitly pursue corporate venture capital to harness novel technology. Using a panel of CVC investments, we present evidence consistent with our proposition. The findings are robust to various specifications and remain unchanged even after controlling for unobserved heterogeneity in investing firms. Our results have important implications for corporate venture capital in particular, and technology strategy in general.     

财产保险投资所得课税规则的国际比较及其启示

财产保险投资所得课税规则涉及资本利得的税务处理和一般性投资所得的税务处理两个方面,如何对待实现的和未实现的资本利得或损失是形成税制差异的核心所在。我国应通过扩大投资准备金税前扣除范围、适当降低资本利得适用税率等方式对财产保险投资给予税收支持。     

Effects of personal taxes and equity issuing costs on the firm's investment decision

The existence of preferential taxes on capital gains relative to ordinary income is widely understood to create a systematic preference for internal rather than external equity financing. This preference is magnified by the existence of issuing costs on new equity. This paper develops a procedure to account for these market imperfections in terms of an adjusted net present value that directly adjusts a project's net present value calculated without regard to the imperfections. Once the correct adjustment procedure is developed, the practical implications of personal taxes and issuing costs on the firm's investment behavior clearly emerges. These market imperfections have created a discontinuous function for the firm in obtaining equity capital. Many rational wealth-maximizing firms are forced to make investment decisions in a situation similar to capital rationing as the separation theorem between investing and financing does not generally hold. This explanation of a potentially long-run need for capital rationing is consistent with otherwise perfect capital markets.     

Chinese venture investments in the United States, 2010–2017

This article contributes to the understanding of Chinese venture investors in the United States by comprehensively measuring the amount and type of venture investments coming to the United States from China. Venture activity is examined by focusing on the number of investments made by venture capital funds, both U.S.‐ and China‐based that include Chinese corporations undertaking corporate venture capital (CVC). Chinese participation in venture funding of United States emerging companies increased from 21 investments in 2010 to 407 in 2016 and 2017. Venture capital funds account for 78% of the investment activity, with Chinese CVC undertaking 22% of the investments. We contribute to the literature of CVC by providing definitions of three specific types of investing firms: corporate funds, strategic investors, and strategic partnerships. In addition, we provide data and examine the motivations of Chinese firms forming strategic partnerships with United States startups.     

The Capital Gains Tax: A Curse but Also a Blessing for Venture Capital Investment

Our study analyzes the effect of the capital gains tax on the individual investment decisions of venture capitalists. By doing so, we are able to study the decisions for a sample of 61,558 funding rounds in 32 countries from 2000 to 2012. Our results support the predictions of the theoretical model that higher capital gains tax rates are associated with fewer start‐ups financed and a lower probability of receiving follow‐up funding. However, the results concerning the effect on the probability of success of start‐ups show that a higher tax burden is associated with a higher probability of eventual start‐up success.     

Venture capital investing for corporate development objectives

There is a significant new player emerging in the venture capital world whose participation is changing the way that the venture business is done. Domestic and foreign corporations have discovered that investing in venture capital adds a new dimension to their corporate development strategies and can also make an outstanding return on investment.Armed with serious amounts of cash, aware of the value of an association with their name and frequently possessing marketing power that a small company covets, corporations are competing with venture capitalists for the best deals. Obtaining a “corporate partner” is now an accepted part of a small company's financing strategy.For the corporate development executive, this activity provides a useful tool to widen the spectrum of participation in new technologies while retaining the entrepreneurial drive and reducing the cost and exposure of new ventures. However, it is not a panacea for growth and caution should be exercised to avoid creating unrealistic expectations.Both entrepreneurs and venture capitalists welcome this source of later-stage capital, providing it minimizes equity dilution and assists in product development, marketing and liquidity for their investment. However, it is a competitor for the venture capitalists in sourcing deals and a potential adversary for the entrepreneur when objectives clash. Additionally, entrepreneurs and venture capitalists often are suspicious of the corporation in the small company's boardroom.The objective of most corporations is the strategic benefits that can result from venture capital investing, such as acquisitions, technology licenses, product marketing rights, international opportunities and a window on technology. However, this objective is frequently mixed with a financial return objective and can lead to a confused strategy.Participation by corporations can take many different forms but usually begins with investments in several venture capital funds as a limited partner and evolves into direct investments in venture companies. Formation of a venture development subsidiary by the corporation is a demonstrated way to maximize the strategic rewards. If financial return is the only objective, then a stand-alone venture fund is the best vehicle.The most important factors for the strategic success of a corporate program are the creation of a high-quality deal stream and the use of outstanding people to interface between the corporation and the venture capital world. In addition, there has to be a long-term commitment, active involvement and a carefully devised internal communications strategy to promote and protect the program.Creation of a formal venture development subsidiary is probably the best way to maximize the strategic objectives. Lubrizol Enterprises operates as such a subsidiary of The Lubrizol Corporation and utilizes venture capital investing, acquisitions, partnerships, and contract research to develop strategic business units based on leading-edge technologies.     

Angels and non-angels: Are there differences?

The market for informal venture capital is an elusive and nearly invisible source of financing for entrepreneurial ventures. This market consists of a diverse set of high net worth individuals (business angels) who invest a portion of their assets in high-risk, high-return entrepreneurial ventures. The emerging consensus of the characteristics of the individual investor is that of a well-educated,middle-aged individual with considerable business experience and a substantial net worth. These informal investors appear to prefer investing in the early start-up stage of the venture and, if given a choice, prefer that their investments be located close to home. One consequence of this consensus is the tendency to assume that the traits of these business angels are as tightly clustered around the norm as are the traits of venture capital funds. They are not. In terms of their competence in the many areas of venture investing, these Individual investors range from the successful, cashed-out entrepreneur on the one hand to individuals with little or no experience with venture investing on the other. At the same time, little is known about the characteristics of high net worth individuals who never ventured where angels dare to tread, or about these non-angels' propensity to join the fold. Thus, this study seeks to fill the void by examining the characteristics of high net worth individuals regardless of their investment history or their interest in venture investing.An analysis of the data reveals three groups of high net worth Individuals: business angels with experience investing in entrepreneurial ventures, interested potential investors with no venture investment history but who express a desire to enter the venture investment market, and uninterested potential investors who under no circumstances would consider investing in entrepreneurial ventures as part of their investment strategy. Business angels and potential investors (both the interested and non-interested segment) share similar views about the economic significance of the entrepreneur and the difficulty in securing the equity capital for development of the venture. As the issues move from the general to the specific, divergence in investment attitudes takes place among the two groups, but this divergence is in terms of magnitude or intensity, rather than in contrasting or opposing views of the process. The potential investor tends to view investing in entrepreneurial ventures on a smaller scale than the active investor, especially in terms of the dollar amount committed to any one investment. While the business angel is more interested than the potential investor across all stages of financing, the interest for both groups increases as the type of financing progresses from the seed stage to expansion financing. In contrast, the potential investor is more likely to seek diversification as a motivation for venture investing than their angel counterparts.The potential investor pool is segmented into those potential investors who appear willing to take on the role of business angels and those individuals who have no desire to participate in the venture market. For the interested group to increase their interest in providing venture capital, these potential investors want assistance in monitoring the performance of the venture investment, followed by assistance in pricing and structuring. Both of these resources relate more to the technical aspects of venture investing and Indicate that these are the areas where the potential investor is least likely to have expertise. Other resources, such as finding and evaluating the investment opportunity, appear to represent less of a stimulus for the potential investor. In many respects, interested potential investors act like business angels across several dimensions. Both consider the later stages of the development of the venture as the preferred stage to invest. The business angel and interested potential investor prefer investments to be located relatively close to their primary residence and share similar views on the amount of the investment portfolio to allocate to venture investing. Where the interested potential investor and business angel clearly differ is on the scale of the commitment and the motivation for investing. The potential investor will commit a smaller dollar amount to any one venture, is more inclined to participate with other investors, and is more apt to see venture investing as a diversification strategy than is the seasoned business angel.     

逆周期资本账户管制对宏观经济稳定与社会福利改善的作用

资本管制能否有效抵御外部冲击实现宏观经济稳定存在争论,本文通过构造开放经济的DSGE模型研究投资限制和逆周期金融交易税等资本管制工具对于实现宏观经济稳定和改善社会福利的作用。通过比较不同政策安排下主要宏观经济变量的波动性和脉冲响应函数可以发现,采用逆周期金融交易税作为资本管制工具在抵御外部冲击、维持宏观经济稳定方面具有比较优势。设置投资限制的资本管制促进了货币政策的独立性,可以使货币政策专注管理国内的经济增长和通货膨胀问题。通过不同政策安排下的福利分析可知,增加投资国外资产的限制对社会福利的增进起到负面作用,增加逆周期金融交易税的资本管制却可以减轻由投资限制导致的资源配置扭曲,从而放松投资国外资产的限制从根本上提高社会福利。所以,在资本管制工具的选择上,采取逆周期金融交易税可能比采用投资限制更优。随着资本账户开放的基本条件不断成熟,用金融交易税取代投资限制更符合浮动汇率制和自由兑换的资本账户的需求。     

中国农民专业合作社股份化的成因探析——基于社员选择的视角

通过对牵头人选择以股份形式组建合作社以及普通农户社员选择加入股份化合作社的动因进行研究,结果表明:具有企业家人才特质和资金资源的牵头人,一方面要求自身的人力资本价值得到实现并参与剩余分配,另一方面以资金投入到合作社的运营中,要求得到社会平均的投资收益,因而他们基于利益驱动选择以缴纳股份方式组建合作社;普通社员希望享有股份化合作社提供的各种优势资源,以降低风险、提高收益和降低成本,因此也愿意选择加入股份合作社。     

Wirkungen der Abgeltungsteuer auf die Kapitalallokation — Anregungen für eine Reform

The flat tax was introduced in Germany in 2009. It is imposed on income from portfolio investment, such as interest and dividends, but also on gains from stock sales. As this paper shows, the tax causes a massive distortion of after-tax returns in favour of debt capital. The financing structure of companies will therefore change in favour of debt capital. The tax discriminates German investors against foreign investors and the profitability of equity decreases strongly. The withholding tax has serious conceptual weaknesses that cause a massive misallocation of capital and thus a lasting damage to growth in Germany. Several recommendations for the necessary amendments are outlined in the article.     

The Drivers of Responsible Investment: The Case of European Pension Funds

We investigate what drives responsible investment of European pension funds. Pension funds are institutional investors who assure the income of part of the population for a long period of time. Increasingly, stakeholders hold pension funds accountable for the non-financial consequences of their investments and many funds have engaged in responsible investing. However, it appears that there is a wide difference between pension funds in this respect. We investigate what determines pension funds’ responsible investments on the basis of a survey of more than 250 pension funds in 15 European countries in 2010. We use multinomial logistic regression and find that especially legal origin of the country, ownership of the pension fund and fund size-related variables are to be associated with pension funds′ responsible investment. For fund size, we establish a curvilinear relationship; especially the smallest and largest pension funds in the sample tend to engage with responsible investing.     

Tax Benefits of Open Individual Private Pension Plans

This article describes the open private pension plans offered in Brazil, which is one of the four pillars of the Brazilian retirement system. A framework is created to describe and analyze the impact of the transaction costs and tax advantages one can obtain from these financial products. This framework allows us to show and measure the advantages of these products versus other alternatives for long-term investment in the Brazilian financial market. It is shown that private plans are better than direct investment in funds in a high interest rate environment.     

Publicly traded venture capital funds: implications for institutional “fund of funds” investors

Institutional investors supply the bulk of the funds which are used by venture capital investment firms in financing emerging growth companies. These investors typically place their funds in a number of venture capital firms, thus achieving diversification across a range of investment philosophy, geography, management, industry, investment life cycle stage and type of security. Essentially, each institutional investor manages a “fund of funds,” attempting through the principles of portfolio theory to reduce the risk of participating in the venture capital business while retaining the up-side potential which was the original source of attraction to the business. Because most venture capital investment firms are privately held limited partnerships, it is very difficult to measure risk adjusted rates of return on these funds on a continuous basis.In this paper, we use the set of twelve publicly traded venture capital firms as a proxy to develop insight regarding the risk reduction effect of investment in a portfolio of venture capital funds, i.e., a fund of funds. Measurements of weekly total returns for the shares of these funds are compared with similar returns on a set of comparably sized “maximum capital gain” mutual funds and the daily return of the S&P 500 Index. A comparison of returns on an individual fund basis, as well as a correlation of daily returns of these individual funds, were made. In order to adjust for any systematic bias resulting from the “thin market” characteristic of the securities of the firms being observed, the Scholes-Williams beta estimation technique was used to reduce the effects of nonsynchronous trading.The results indicate that superior returns are realized on such portfolios when compared with portfolios of growth-oriented mutual funds and with the S&P 500 Index. This is the case whether the portfolios are equally weighted (i.e., “naive”) or constructed to be mean-variant efficient, ex ante, according to the capital asset pricing model. When compared individually, more of the venture funds dominated the S&P Market Index than did the mutual funds and by much larger margins. When combined in portfolios, the venture capital funds demonstrated very low beta coefficients and very low covariance of returns among portfolio components when compared with portfolios of mutual funds. To aid in interpreting these results, we analyzed the discounts and premia from net asset value on the funds involved and compared them to Thompson's findings regarding the contribution of such differences to abnormal returns. We found that observed excess returns greatly exceed the level which would be explained by these differences.The implications of these results for the practitioner are significant. They essentially tell us that, while investment in individual venture capital deals is considered to have high risk relative to potential return, combinations of deals (i.e., venture capital portfolios) were shown to produce superior risk adjusted returns in the market place. Further, these results show that further combining these portfolios into larger portfolios (i.e., “funds of funds”) provides even greater excess returns over the market index, thus plausibly explaining the “fund of funds” approach to venture capital investment taken by many institutional investors.While the funds studied are relatively small and are either small business investment companies or business development companies, they serve as a useful proxy for the organized venture capital industry, despite the fact that the bulk of the funds in the industry are institutionally funded, private, closely held limited partnerships which do not trade continuously in an open market. These results demonstrate to investors the magnitude of the differences in risk adjusted total return between publicly traded venture capital funds and growth oriented mutual funds on an individual fund basis. They also demonstrate to investors the power of the “fund of funds” approach to institutional involvement in the venture capital business. Because such an approach produces better risk adjusted investment results for the institutional investor, it seems to justify a greater flow of capital into the business from more risk averse institutional investment sources. This may mean greater access to institutional funds for those seeking to form new venture capital funds. For entrepreneurs seeking venture capital funds for their young companies, it may also mean a lower potential cost of capital for the financing of business venturing. From the viewpoint of public policy makers interested in facilitating the funding of business venturing, it may provide insight regarding regulatory issues surrounding taxation and the barriers and incentives which affect venture capital investment.     

有限合伙制私募股权投资基金所得税问题探讨

自然人合伙人个人所得税税率偏高;法人合伙人分得的私募股权投资基金基金取得的投资性收益是否免税以及企业法人缴纳企业所得税时合伙企业的股权投资损失是否可以抵减其盈利等,这些问题在新的合伙企业法中既有不合理之处,也有不确定因素。建议:自然人合伙人个人所得税税率标准统一定为20%;法人合伙人分得的私募股权投资基金基金取得的股息等投资性收益,应该享受免税待遇,法人合伙人可以在计算其缴纳企业所得税时,扣除合伙企业股权投资损失。     

Venture capital's role in financing innovation for economic growth

Previously, there has been little empirical evidence about the role of venture capital in fostering technological innovation. Recent research, sponsored by the National Science Foundation and Babson College and completed with our colleagues Stanley E. Pratt and Norman Fast (Venture Economics and Venture Capital Journal) shed some new light on the flow of venture capital to highly innovative technological ventures from 1967–1982. The evidence suggests that venture capital not only plays a significant role, but that it is a unique kind of investing in terms of when, where, and how it is done. Ironically, this research indicates that the “capital” in venture capital is the least important ingredient in fostering technological innovation. Rather, it is management intensive, requiring very early involvement by venture capitalists in nurturing budding innovators and technology, and thereby bird-dogging and accelerating the emergence of highly innovative technologies. Further, the post-1979 reduction of the capital-gains tax has led to unprecedented growth and development in the venture-capital industry. One result has been that a new industry structure is emerging, and along with it some new danger signals for the future flow and commercialization of technological innovation. Several lessons emerge from our findings that hold implications for venture capital investors and entrepreneurs alike.Successful venture-capital investing in technologically innovative firms requires more than just risk money. Savvy entrepreneurs seek out venture capitalists with noteworthy reputations for their nonmonetary, high value-added contributions to fledgling firms. Venture capitalists who can play a highly constructive role in emerging firms can attract higher-quality ventures. Qualities commonly cited by entrepreneurs are: helping to find the select key management-team members: providing credibility with suppliers and customers; and helping to shape strategy when the daily pressures postpone this vital task. As one put it, “It is far more important whom you obtain funding from than how much and at what price.”Investing in technologically innovative ventures is a more specialized business than suggested by the common stereotype of homogeneity among venture capitalists. Fewer than 5% of the 464 venture-capital firms in our study accounted for nearly 25% of all the investments in highly innovative technological ventures. Investors posses sepcialized know-how, including a web of contacts and networks, a great degree of syndication of deals, and a great intensity of involvement. The message for technology entrepreneurs is clear: focus on venture-capital firms with reputations for proven performance in your technology and market, especially with your targeted customers.Contrary to the notion that venture-capital investors sit and wait for business plans and innovative ideas to come to them and then simply write checks, many of the most active firms do just the opposite: they engage in active “bird-dogging” efforts to identify exceptional innovators with the relevant technical expertise and commitment to bring about the commercialization of promising technologies. They also team with innovators and entrepreneurs to create an “acceleration effect” by actually compressing the time span and increasing the velocity at which new technologies are brought to commercial maturity and societal utility. Founders and investors alike have related numerous examples of highly innovative technological ventures that became realities in what they believed to be one-fourth to one-half the time that would have been required within a large, established firm.Looking ahead, the new venture-capital climate of the mid-1980s offers both bane and blessing.As the pool of capital has exploded, the industry has become more diverse and specialized than even before. Sharp differences are visible in terms of investing objectives, criteria, and strategy, focusing on particular stages, size, and a technology-market niche. Megafunds of $100 + million have been raised, and as funds get larger the minimum investment escalates, typically $1 million or more now. Entrepreneurs in search of venture capital need to be more knowledgeable and focused than ever before.Significant portfolio problems continue to surface as the would-be “pearls” of 1982–1984 become “lemons” in 1985–1986. One results of this is the drying up of funds for seed and strat-up investments. Many venture capitalists are simply overburdened by cleaning up problems in their own portfolios and in replacing management. Fortunately, some innovative venture capitalists have seen opportunity in this adversity, and a handful of specialized seed and first-stage funds have been launched.Ironically, many of the trends and pressures in the venture-capital industry in the mid-1980s may inadvertently shift investing attention away from more innovative technological ventures. The implications of these changes are painful for entrepreneurs, investors, and the nations. How can technological innovation and international competitiveness be achieved of the venture-capital community is unable-or unwilling-to contribute as greatly to the funding of new innovations as it has in the past? Where will technology entrepreneurs find the risk capital and “value-added involvement” so vital to commercial success? And how can venture-capital pools provide the handsome yields on invested capital of the past if they shift investing to later-stage ventures?On the brighter side, we are still in an era of unprecedented opportunity for entrepreneurs and investors alike. Even with the sharp drop in new funds available in venture-capital pools to an estimated $2.5 billion in 1985, this is still 25 to 50 times greater than the annual flow of new venture capital during the dismal 1970s. The recent industry shake-up, coupled with a continuance of the favorable capital-gains tax, should foster a healthier, if not wiser and more disciplined, venture-capital industry during the remainder of the decade.     

The impact of institutional sources of capital upon the minority-oriented venture capital industry

Venture capital (VC) funds specializing in investing equity capital in minority-owned businesses have grown rapidly over the past decade, fueled by the willingness of major institutional investors to support this traditionally neglected niche. We investigate impacts of public pension funds upon the minority VC sector. These funds, providing over half of all capital invested in minority VCs, selectively invest, seeking to fund only those VCs likely to generate high returns. Although they attempt to pick the winners, our findings indicate that they have failed to do so. The influence of public pension funds upon the minority VCs is nonetheless real, skewing investing away from traditional practices and toward those of the venture capital mainstream. In the process, minority VCs funded by pension fund money invest in high-tech fields more than other minority-oriented VC funds do. Further, they are less likely to fund minority-owned small firms, focusing increasingly upon firms owned by nonminority Whites. Neither of these trends has resulted in increased returns. Rather, diverting minority-oriented VCs away from their traditional mission of investing in minority firms operating in a broad range of industries has resulted in lower returns over the years studied.     

论企业应收账款的风险及防范

在市场经济中,赊销是企业进行促销的重要手段,它给企业带来效益,而产生的应收账款也给企业带来了风险,将直接影响企业营运资金的周转和经济效益。在分析应收账款风险产生原因的基础上,就防范、控制应收账款风险,提高资金使用效率提出了对策。     

Valuation and firm investment and financing policies with personal tax biases

In this paper we examine firm financial policies in the presence of personal tax biases (e.g., favoring capital gains relative to interest and dividends). A form of the value additivity principle (VAP) for the tax bias case is established and applied to the firm's merger, investment, financial structure, and dividend decisions. As with the neutral tax VAP, the revised VAP requires transaction costless capital markets but does not require capital market completeness or competitiveness. Share value maximization is found not to be the proper goal for a firm that seeks to maximize the shareholders' current expected utility; however, it is found that share value maximization is generally a good approximate objective. Firm investment policy with financial structure irrelevance (owing to offsetting personal and corporate taxes) is examined assuming that the revised VAP holds.     

The performance of socially responsible equity mutual funds: Evidence from Sweden

This paper presents a comprehensive analysis of socially responsible (SR) funds in Sweden by assessing fund managers' abilities and performances across different market states. These issues are analyzed at the aggregate and individual fund levels. The paper also presents several new statistical tests that allow more precise inferences about differences in performance and the variability in fund returns arising from different benchmarks. In general, SR and conventional funds perform similarly to the market. At the aggregate level, SR funds investing in Sweden and Europe perform similarly to conventional funds, while those investing globally tend to underperform. This underperformance seems to be linked with poor selectivity abilities of global SR fund managers. For individual funds, the performance of both types of funds is more similar. Most funds perform similarly in crisis periods compared to non‐crisis periods. Overall, our results are consistent with a mature market for SR investing and support the view that the similar performance of SR and conventional funds is associated with the mainstreaming of SR investment in Sweden. These findings encourage SR investing both by socially conscious investors, who wish to align their social values with their investment decisions, as well as by conventional investors, who will not be penalized by investing in these funds. We also call attention to the difficulties investors face when trying to identify funds with high social standards, considering that there is scarce information on the extent to which each fund (SR or conventional) holds stocks that comply with ethical and social criteria.