Measuring the Effectiveness of Public Policy Towards Venture Capital

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2013-04-11

Summary:

Editor’s Note: The following post comes to us from Douglas Cumming, a Professor in Finance and Entrepreneurship at York University - Schulich School of Business.

A recent book by Josh Lerner and a recent article in the Journal of Public Economics has asserted that government venture capital programs in Europe have displaced or crowded out private venture capital. The result of work such as this has been to place pressure on government bodies around the world to remove or replace their existing governmental programs. In the aftermath of the financial crisis, venture capital markets around the world themselves have been in crisis. So, it is particularly timely to address the issue of whether or not government venture capital programs in regions such as Europe really have in fact crowded out private venture capital programs.

As pointed out in this Economist article and in my recent commentary and my review article, the idea that government programs crowding out private venture capital in Josh Lerner’s book and in the Journal of Public Economics is based on empirical measures that are completely flawed. The empirical tests supporting crowding out are based on methodologies that rank the Austrian and Hungarian venture capital markets as being the best in the Europe, and the U.K. venture capital market as being the worst in Europe (I am not kidding).

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Link:

http://blogs.law.harvard.edu/corpgov/2013/04/11/measuring-the-effectiveness-of-public-policy-towards-venture-capital/

From feeds:

Blogs.law Aggregation Hub » The Harvard Law School Forum on Corporate Governance and Financial Regulation

Tags:

innovation europe academic research empirical research international corporate governance & regulation international governance private equity venture capital firms public finance douglas cumming

Authors:

June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation,

Date tagged:

04/11/2013, 12:00

Date published:

04/11/2013, 09:21