Library:
Paris Champerret
Madrid
London
Paris Montparnasse
Turin
Berlin
- Item type
- Study and report
- Dissertation
- Language
- English
- Publication year
- 2024
- Contributors
- SUCCI, Chiara
- Subjects
- MANAGEMENT
Venture Capital (VC) is widely recognized as a crucial factor for startup growth, and several policies are designed by governments to ensure a higher availability of this type of finance. However, there is a concern that in an economy without economic dynamism and the resulting prospects for growth, venture capital may not help promote the projected growth. Conversely, the weakness of venture capital may be a sensible response by investors and it could signal that something in the economy is not working properly.
This work particularly investigates the causal and temporal relationship between Mergers and Acquisitions (M&A) and Venture Capital investments, arguing that a more active M&A market may act as a precursor, with a certain time lag, to increased Venture Capital activity, because investors react positively to better exit opportunities. Few studies have investigated the complex dynamics between M&A and VC markets, this study aims to fill the gap through a cross-country perspective, contributing to the academic debate and offering insights to investors, governments, and policymakers.
A systematic review of the literature on subject matter has been conducted. Furthermore, a total of 10 nations have been specifically selected, and comprehensive data has been obtained regarding their GDP, long-term interest rates, number and value of venture capital investments, as well as the number and value of mergers and acquisitions investments.
A preliminary analysis with correlations and graphs for each country was first carried out. Based on the temporal lags identified, a multivariate linear regression model has been developed and the regression line equation derived.
The study’s findings demonstrate that M&A and VC activities are positively correlated with varying time lags dependent on the country. In the most mature and efficient markets, such as the USA, the UK, and Israel, the variables GDP, long-term interest rates, and M&A activity can well explain VC activity’s variance with the temporal lag identified. Whereas, in countries like Italy, Spain, and Japan that virtuous system is weak or absent, thus limiting the predictive power of the regression.
