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Dialect Distance and Venture Capital Risk‐Taking: Evidence From China

Year: 2025

Type: article

Abstract: ABSTRACT This study investigates how dialect distance affects venture capital (VC) firms' risk‐taking behaviour in China. Using data from 29,208 investment rounds between 2000 and 2018, we find that longer dialect distance reduces VC investment in early‐stage portfolio companies due to strengthening information asymmetry concerns and building trust barriers. However, the negative effect is weakened by factors such as VC managers' experience, high‐speed rail connectivity, regional quality of law enforcement, joint investments, central network position, and higher portfolio company patent activity. Our results highlight dialect distance as a significant obstacle to cross‐regional VC investments in China.

Source: Accounting and Finance

DOI: 10.1111/acfi.70073

Authors: Jianjun Li, Ji Wu, Tairan Kevin Huang, Yu Guo

Institutions: East China University of Science and Technology, Massey University, University of Wollongong, Shanghai Lixin University of Accounting and Finance

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

OpenAlex ID: W4413239918

FWCI: 2.681

Cites: 108

Cited by: 1

Related to: 10