Essays on cross-border private equity investments.

摘要

This dissertation addresses two issues related to cross-border private equity investments by U.S. firms. The first issue is related to investment performance. Specifically, I compare the performance of U.S. cross-border venture investments with venture investments made domestically. I test whether higher informational and monitoring costs present in the foreign environment affect the ability of U.S. venture capital firms to select and monitor portfolio companies; or whether an expanded opportunity set and lower levels of competition in the foreign environment affect U.S. investments. I find that U.S. firms perform as well in foreign venture investments as they do in domestic venture investments. The findings suggest that the ability of U.S. venture capital firms to select and oversee portfolio companies transfers to foreign environments.; The second issue I consider is the importance of the legal environment for cross-border investing. This analysis proceeds in two ways. First, I examine whether the legal environment is an important determinant of cross-border private equity investments. Specifically, I examine whether U.S. firms are deterred from investing in countries with poor legal protection or if firms are able to take advantage of missed opportunities in these countries. I do this by examining total investment amount in a country and the proportion of a country's total private equity investment made up by U.S. firms. I find that U.S. venture capital firms invest more in countries where the quality of the legal environment is high.; Second, I analyze whether the legal environment affects cross-border investment strategy. Specifically, I examine whether U.S. venture capital firms mitigate or solve enforcement problems by taking a greater equity stake in weaker legal environments. In emerging economies, U.S. venture capital firms take a greater equity stake in countries with weaker legal environments. This finding is consistent with U.S. firms employing a third best outcome in weak legal environments to mitigate enforcement problems. In developed economies, U.S. venture capital firms do not seem to employ a third best outcome. The importance of the legal environment may be second nature in developed economies.