The Determinants of Venture Capital in Europe—Evidence Across Countries

Abstract This article analyses the determinants of European venture capital activity. The main novelty of our work is in accounting for the idiosyncrasies of the European venture capital market. In particular, we investigate whether the size of the merger and acquisition market (M&A) is important in explaining venture capital. Moreover, our work is the first that analyses the impact of the degree of information asymmetry at the macro level, the direct impact of the level of entrepreneurial activity and the impact of the unemployment rate on venture capital activity. We use aggregate data from 23 European countries for the period 1998–2003 to estimate panel data models with fixed and random effects. Our results reveal that the size of the M&A market and the market-to-book ratio have a positive impact on venture capital activity whereas the unemployment rate influences the venture capital market negatively. These results highlight the importance of the exit environment and of the degree of asymmetric information for the venture capital market

The impact of microcredit on poverty reduction in eleven developing countries in south-east Asia

This paper examines the impact of microcredit on poverty reduction, controlling for income and its distribution, employment, inflation rate and education, in 11 developing countries in south-east Asia. Static and dynamic panel data models were used in the growth-poverty model initially suggested by Ravallion (1997), with data from 2007 to 2016. The results indicate that microcredit reduces poverty (as measured by the headcount index, poverty gap and squared poverty gap). They also indicate that employment and education can reduce the level of poverty.This paper is financed by National Funds of the FCT – Portuguese Foundation for Science and Technology within the project “UID/ECO/04007/2019

Comparative Study of Financial Distress Prediction Models: Evidence from Pakistan

Traditional financial distress prediction models performed well for the developed markets, however, their applicability and predictability is limited for the emerging markets especially during the financial crisis. This paper compares the predictability of five most widely used distress prediction models developed by Altman (1968), Ohlson (1980), Zmijewski (1984), Shumway (2001) and Blums (2003) by using up-todate data of emerging market from 2001 to 2015. Furthermore, the study tested the predictive power of the models before, during and after the financial crisis period. Results showed that Probit model has the higher overall prediction accuracy but the Z-Score more accurately predict financially distressed firms of emerging markets. Both models can be used by researchers, organizations and all other concerned parties to indicate early warning signs for the emerging markets. An important contribution of the paper is the definition of financial distress for the emerging markets where there are no databases with this type of classification. Along with the detailed criteria to classify distressed and non-distressed firms with the large time frame and data set, the study identifies the best predictor of financial distress. This paper also contributes to the literature by checking the changes in the predictability of the models with respect to the financial crisi

Determinants of Profitability in the Tourism Sector in Portugal

This paper examines the impact on the profitability of firms in the Portuguese tourism sector of both internal (size, age, growth, debt) and external (real GDP growth rate, sovereign debt crisis, location) determinants. Panel data models have been employed on a large sample of small and medium sized firms, from 2009 to 2017, a period critically influenced by both the financial and the ensuing sovereign debt crisis in the southern European countries. Alternative profitability measures have been used and the results have been largely robust to the distinct models’ specifications. The results suggested that profitability is positively affected by firm’s size and age and by economic real growth rates, and negatively influenced by the firm’s indebtedness ratio and the sovereign debt crisis. Firms in the main tourism regions are generally more profitable, and relatively less affected by the sovereign debt crisis, that was particularly harmful to micro-size firms

ORGANIZATIONAL PERFORMANCE MEASUREMENT AND EVALUATION SYSTEMS IN SMEs: THE CASE OF THE TRANSFORMING INDUSTRY IN PORTUGAL

The competitiveness of organizations depends, among other things, of their performance levels. For such, it is vitally important that they have a measurement and evaluation system that, from a set of indicators, provides them reliable information to reflect their goals and evaluate their performances. The aims of this study are: (i) to identify the most discussed approaches in the literature to evaluate the organizational performance, and (ii) to carry out a diagnosis of how small and medium enterprises with economic activity in Portugal measure and operationalize the evaluation of their performance. To meet the objectives of the study, we proceeded to the analysis of published studies in scientific journals and conducted twelve interviews in SMEs. The results indicate that, in addition to the majority of the studied organizations not having a formal process of their strategy, they also do not measure their results in an integrated system that would allow them to make an evaluation according to their strategic goals

The exit decision in the European venture capital market

This article analyses the exit decision in the European venture capital market, studying when to exit and how it interacts with the exit form. Using a competing risks model we study the impact on the exit decision of the characteristics of venture capital investors, of their investments and of contracting variables. Our results reveals that the hazard functions are non-monotonic for all exit forms and suggest that, in Europe, Initial Public Offering candidates take longer to be selected than trade sales. Moreover our results show that, in Europe, venture capitalists associated with financial institutions have quicker exits (stronger for trade sales), and highlight the importance of contracting variables on the exit decision. An unexpected result is that the presence on the board of directors leads to longer investment durations