Has Europe Been Catching Up? An Industry Level Analysis of Venture Capital Success over 1985 - 2009

After nearly two decades of U.S. leadership in the 1980s and 1990s, are Europe's venture capital markets in the 2000s finally catching up regarding the provision of financing and successful exits, or is the performance gap as wide as ever? Are we amidst overall dismal performance of the venture capital experience without any encouraging news? We attempt to answer these questions by tracking down over 40,000 venture capital--backed firms of six industries in 13 European countries and the U.S., and determine which type of exit - if any - each particular firm's investors have chosen between 1985 and 2009. Our empirical findings suggest that: (i) in terms of the number of venture capital-backed firms successfully going public, European venture capitalists have closed the gap with respect to the U.S., albeit as a result of a worse initial public offering performance overall; (ii) Europe continues to lag behind the U.S. by means of mergers and acquisitions, and in successful exits of seed/start-up and early stage firms, (iii) average investment and R&D are important determinants of venture capital success, but only have a positive impact after 2000; and (iv) idiosyncratic differences across industries seem to be more relevant than country-specific characteristics in explaining differences in performance.Venture capital, private equity, success rates, performance, IPOs.

Risk and return characteristics of Islamic equity funds

Islamic equity funds (IEFs) differ fundamentally from conventional equity funds since Muslims are prohibited to invest in certain companies/sectors and pay or receive interest. This paper analyzes the risk and return characteristics of a sample of 145 IEFs over the period 2000 to 2009. Our results show that IEFs are underperformers compared to Islamic as well as to conventional equity benchmarks. This underperformance seems to have increased during the recent financial crisis. We also find that IEF managers are bad market timers. They try to time the market, but in doing so, reduce the return rather than increasing it. An important implication of our results is that Muslim investors might improve their performance by investing in index tracking funds or ETFs rather than to invest in individual IEFs. © 2011 Elsevier B.V

Washington meets Wall Street: A Closer Examination of the Presidential Cycle Puzzle

This paper tests the policitcal dimensions of the presidential cycle effect in U.S. financial markets. The presidential cycle effect states that average stock market returns are significantly higher in the last two years compared to the first two years of a presidential term. We confirm the robust existence of this cycle in U.S. stock markets as well as bond markets. As most rational theories to explain the cycle were falsified by earlier empirical work, this paper sets out to test the presidential cycle election (PCE) theory as an alternative explanation. The PCE theory states that incumbent parties and presidents have an incentive to manipulate the economy (via budget expansions, taxes, etc.) to remain in power. We formulate seven different propositions relating to fiscal, monetary, tax, and political implications of PCE theory. We find no statistically significant evidence confirming the PCE theory as a plausible explanation for the presidential cycle effect. The existence of the presidential cycle effect in U.S. financial markets thus remains a puzzle that cannot be easily explained by politicians mis-using their economic influence to remain in power.political economy, inefficient markets, market anomalies, calendar effects