Business

The collusion behavior of venture capitalists and entrepreneurs based on "guanxi": evidence from China

L. Li, Q. Chen, et al.

This exciting research conducted by Liping Li, Qisheng Chen, Ximeng Jia, Jin Chen, and Enrique Herrera-Viedma delves into the intriguing collusion dynamics between venture capitalists and entrepreneurs in China, highlighting how 'guanxi' fosters self-interest, impacts returns, and increases corporate risks. Discover how equity incentives can make a difference!

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Playback language: English

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Abstract

This research investigates the collusion behavior between venture capitalists and entrepreneurs in China, focusing on the influence of "guanxi" (social relationships). Using data from GEM-listed companies (2009-2021), the study finds that "guanxi" facilitates collusion, leading to increased entrepreneurial self-interest, higher venture capitalist returns, harm to minority shareholders, and increased corporate operational risk. Equity incentives are shown to mitigate this collusion.

Publisher

Humanities & Social Sciences Communications

Published On

Oct 05, 2024

Authors

Liping Li, Qisheng Chen, Ximeng Jia, Jin Chen, Enrique Herrera-Viedma

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