Institutional Reinvestments in Private Equity Funds as a Double-Edged Sword: The Role of the Status Quo Bias

REFERENCES

• Ackert , L. and Church , B. K. 2006 . Firm Image and Individual Investment Decisions . Journal of Behavioral Finance , 7 ( 3 ) : 155 – 167 .
   Google Scholar
• Agnew , J. , Balduzzi , P. and Sunden , A. 2003 . Portfolio Choice and Trading in a Large 401(k) Plan . American Economic Review , 93 ( 1 ) : 193 – 215 .
   Web of Science ®Google Scholar
• Ai , C. and Norton , E. 2003 . Interaction Terms in Logit and Probit Models . Economics Letters , 80 ( 1 ) : 123 – 129 .
   Web of Science ®Google Scholar
• Akerlof , G. A. 1970 . The Market for Lemons: Quality Uncertainty and the Market Mechanism . Quarterly Journal of Economics , 84 ( 3 ) : 488 – 500 .
   Web of Science ®Google Scholar
• Akerlof , G. A. and Dickens , W. T. 1982 . The Economic Consequences of Cognitive Dissonance . American Economic Review , 72 ( 3 ) : 307 – 319 .
   Web of Science ®Google Scholar
• AltAssets . 2009 . Private Equity and Venture Capital Fund Directory , London : Author .
   Google Scholar
• Amit , R. , Glosten , L. and Muller , E. 1990 . Does Venture Capital Foster the Most Promising Entrepreneurial Firms? . California Management Review , 32 ( 3 ) : 102 – 111 .
   Web of Science ®Google Scholar
• Balboa , M. and Marti , J. 2007 . Factors that Determine the Reputation of Private Equity Managers in Developing Markets . Journal of Business Venturing , 22 ( 4 ) : 453 – 480 .
   Web of Science ®Google Scholar
• Barber , B. M. , Odean , T. and Zhu , N. 2009 . Systematic Noise . Journal of Financial Markets , 12 ( 4 ) : 547 – 569 .
   Web of Science ®Google Scholar
• Barnes , S. and Menzies , V. 2005 . Investment into Venture Capital Funds in Europe: An Explanatory Study . Venture Capital , 7 ( 3 ) : 209 – 226 .
   Google Scholar
• Baron , R. M. and Kenny , D. A. 1986 . The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Considerations . Journal of Personality and Social Psychology , 51 ( 6 ) : 1173 – 1182 .
   PubMed Web of Science ®Google Scholar
• Bates , T. and Bradford , W. 2009 . The Impact of Institutional Sources of Capital upon the Minority-Oriented Venture Capital Industry . Small Business Economics , 33 ( 4 ) : 485 – 496 .
   Web of Science ®Google Scholar
• Bell , D. E. 1982 . Regret in Decision Making Under Uncertainty . Operations Research , 30 ( 5 ) : 961 – 981 .
   Web of Science ®Google Scholar
• Bem , D. J. 1972 . “ Self-Perception Theory ” . In Advances in Experimental Social Psychology, Vol. , Edited by: Berkowitz , L. Vol. 6 , 1 – 62 . New York , NY : Academic Press .
   Google Scholar
• Brettel , M. 2002 . Entscheidungskriterien von Venture Capitalists – Eine Empirische Analyse im internationalen Vergleich . Die Betriebswirtschaft , 62 ( 3 ) : 305 – 325 .
   Google Scholar
• Bundesverband Deutscher Kapitalbeteiligungsgesellschaften (BVK) . 2010 . BVK Statistik – Das Jahr 2009 in Zahlen Eigenverlag, Berlin
   Google Scholar
• Burmeister , K. and Schade , C. 2007 . Are Entrepreneurs’ Decisions more Biased? An Experimental Investigation of the Susceptibility to Status Quo Bias . Journal of Business Venturing , 22 ( 3 ) : 340 – 362 .
   Web of Science ®Google Scholar
• Burt , R. S. 1992 . Structural Holes: The Social Structure of Competition. , Cambridge , MA : Harvard University Press .
   Google Scholar
• Burt , R. S. 2000 . The Network Structure of Social Capital . Research in Organizational Behavior , 22 ( 1 ) : 345 – 423 .
   Google Scholar
• Burton , J. and Scherschmidt , R. 2004 . First-Time Venture Fundraising: Challenges and Best Practices . Journal of Private Equity , 8 ( 1 ) : 9 – 21 .
   Google Scholar
• Busenitz , L. W. and Barney , J. B. 1997 . Differences between Entrepreneurs and Managers in Large Organizations: Biases and Heuristics in Strategic Decision-Making . Journal of Business Venturing , 12 ( 1 ) : 9 – 30 .
   Web of Science ®Google Scholar
• Cable , D. and Shane , S. 1997 . A Prisoner's Dilemma Approach to Entrepreneur-Venture-Capitalist Relationships . Academy of Management Review , 22 ( 1 ) : 142 – 176 .
   Web of Science ®Google Scholar
• Camerer , C. F. and Johnson , E. J. 1991 . “ The Process-Performance Paradox in Expert Judgment: How can Experts Know so Much and Predict so Badly? ” . In Toward a General Theory of Expertise: Prospects and Limits , Edited by: Ericsson , K. A. and Smith , J. 195 – 217 . Cambridge , England : Cambridge University Press .
   Google Scholar
• Choo , F. and Trotman , K. T. 1991 . The Relationship between Knowledge Structure and Judgments for Experienced and Inexperienced Auditors . Accounting Review , 66 ( 3 ) : 464 – 485 .
   Web of Science ®Google Scholar
• Churchill , G. A. 1979 . A Paradigm for Developing Better Measures of Marketing Constructs . Journal of Marketing Research , 16 ( 1 ) : 64 – 73 .
   Web of Science ®Google Scholar
• Coleman , J. S. 1988 . Social Capital in the Creation of Human Capital . American Journal of Sociology , 94 ( Supplement ) : S95 – 120 .
   Web of Science ®Google Scholar
• Cumming , D. and Dai , N. 2010 . Local Bias in Venture Capital Investments . Journal of Empirical Finance , 17 ( 3 ) : 362 – 380 .
   Web of Science ®Google Scholar
• Cumming , D. and Johan , S. 2009 . Legality and Venture Capital Fund Manager Compensation . Venture Capital , 11 ( 1 ) : 23 – 54 .
   Google Scholar
• Dimov , D. , Shepherd , D. A. and Sutcliffe , K. M. 2007 . Requisite Expertise, Firm Reputation, and Status in Venture Capital Investment Allocation Decisions . Journal of Business Venturing , 22 ( 4 ) : 481 – 502 .
   Web of Science ®Google Scholar
• Einhorn , H. 1974 . Expert Judgment: Some Necessary Conditions and an Example . Journal of Applied Psychology , 59 ( 5 ) : 562 – 571 .
   Web of Science ®Google Scholar
• Eisenhardt , K. M. 1989 . Agency Theory: An Assessment and Review . Academy of Management Review , 14 ( 1 ) : 57 – 74 .
   Web of Science ®Google Scholar
• Fama , E. F. 1980 . Agency Problems and the Theory of the Firm . Journal of Political Economy , 88 ( 2 ) : 288 – 307 .
   Web of Science ®Google Scholar
• Fama , E. F. and Jensen , M. C. 1983 . Separation of Ownership and Control . Journal of Law and Economics , 26 ( 2 ) : 301 – 326 .
   Web of Science ®Google Scholar
• Fiedler , M.-O. and Hellmann , T. 2001 . Against All Odds – The Late but Rapid Development of the German Venture Capital Industry . Journal of Private Equity , 4 ( 4 ) : 31 – 45 .
   Google Scholar
• Fombrun , C. 1996 . Reputation: Realizing Value from the Corporate Image , Boston , MA : Harvard Business School Press .
   Google Scholar
• Fombrun , C. and Shanley , M. 1990 . What's in a Name? Reputation Building and Corporate Strategy . Academy of Management Journal , 33 ( 2 ) : 233 – 258 .
   Web of Science ®Google Scholar
• Franke , N. , Gruber , M. , Harhoff , D. and Henkel , J. 2006 . What You Are is What You Like – Similarity Biases in Venture Capitalists’ Evaluations of Start-Up Teams . Journal of Business Venturing , 21 ( 6 ) : 802 – 826 .
   Web of Science ®Google Scholar
• Franke , N. , Gruber , M. , Harhoff , D. and Henkel , J. 2008 . Venture Capitalists’ Evaluations of Start-Up Teams: Trade-Offs, Knock-Out Criteria, and the Impact of VC Experience . Entrepreneurship Theory and Practice , 32 ( 3 ) : 459 – 483 .
   Web of Science ®Google Scholar
• Fried , V. H. and Hisrich , R. D. 1989 . Venture Capital from the Investors’ Perspective . Frontiers of Entrepreneurship Research , 9 : 258 – 273 .
   Google Scholar
• FYB . 2009 . Financial Yearbook Germany 2009 – Private Equity , München : Eigenverlag .
   Google Scholar
• Glode , V. and Green , R. C. 2009 . Information Spillovers and Performance Persistence in Private Equity Partnerships . Working Paper, Carnegie Mellon University
   Google Scholar
• Gobbo , C. and Chi , M. 1986 . How Knowledge is Structured and Used by Expert and Novice Children . Cognitive Development , 1 ( 3 ) : 221 – 237 .
   Web of Science ®Google Scholar
• Golden , B. R. 1992 . The Past is the Past – Or Is It? The Use of Retrospective Accounts as Indicators of Past Strategy . Academy of Management Journal , 35 ( 4 ) : 848 – 860 .
   PubMed Web of Science ®Google Scholar
• Gompers , P. A. 1996 . Grandstanding in the Venture Capital Industry . Journal of Financial Economics , 42 ( 1 ) : 133 – 156 .
   Web of Science ®Google Scholar
• Gompers , P. A. and Lerner , J. 1999 . An Analysis of Compensation in the U.S. Venture Capital Partnership . Journal of Financial Economics , 51 ( 1 ) : 3 – 44 .
   Web of Science ®Google Scholar
• Gompers , P. A. and Lerner , J. 2000 . The Venture Capital Cycle , Cambridge, MA : MIT Press .
   Google Scholar
• Gompers , P. A. and Lerner , J. 2001 . The Venture Capital Revolution . Journal of Economic Perspective , 15 ( 2 ) : 145 – 168 .
   Web of Science ®Google Scholar
• Gompers , P. A. , Lerner , J. , Blair , M. M. and Hellmann , T. 1998 . What Drives Venture Capital Fundraising? . Brookings Papers on Economic Activity, Microeconomics , : 149 – 192 .
   Web of Science ®Google Scholar
• Granovetter , M. 1985 . Economic Action and Social Structure: The Problem of Embeddedness . American Journal of Sociology , 91 ( 3 ) : 481 – 510 .
   Web of Science ®Google Scholar
• Granovetter , M. 2005 . The Impact of Social Structure on Economic Outcomes . Journal of Economic Perspectives , 19 ( 1 ) : 33 – 50 .
   Web of Science ®Google Scholar
• Gulati , R. and Gargiulo , M. 1999 . Where do Interorganizational Networks Come From? . American Journal of Sociology , 104 ( 5 ) : 1439 – 1493 .
   Web of Science ®Google Scholar
• Hair , J. F. , Black , W. C. , Babin , B. J. and Anderson , R. E. 2008 . Multivariate Data Analysis – A Global Perspective , Upper Saddle River , NJ : Pearson Education .
   Google Scholar
• Hamilton , B. H. and Nickerson , J. A. 2003 . Correcting for Endogeneity in Strategic Management Research . Strategic Organization , 1 ( 1 ) : 51 – 78 .
   Google Scholar
• Handelsblatt . 2007 . Private Equity Handbuch 2007 , Frankfurt a. M. : Verlag für Wirtschaftsinformationen .
   Google Scholar
• Hayes , A. F. and Matthes , J. 2009 . Computational Procedures for Probing Interactions in OLS and Logistic Regression: SPSS and SAS Implementations . Behavior Research Methods , 41 ( 3 ) : 924 – 936 .
   PubMed Web of Science ®Google Scholar
• Hobohm , D. 2010 . Investors in Private Equity Funds – Theory, Preferences and Performances , Wiesbaden : Gabler .
   Google Scholar
• Hochberg , Y. V. , Ljungqvist , A. and Lu , Y. 2010 . Networking as a Barrier to Entry and the Competitive Supply of Venture Capital . Journal of Finance , 65 ( 3 ) : 829 – 859 .
   Web of Science ®Google Scholar
• Hoetker , G. 2007 . The Use of Logit and Probit Models in Strategic Management Research: Critical Issues . Strategic Management Journal , 28 ( 4 ) : 331 – 343 .
   Web of Science ®Google Scholar
• Hogarth , R. M. and Makridakis , S. 1981 . Forecasting and Planning: An Evaluation . Management Science , 27 ( 2 ) : 115 – 138 .
   Web of Science ®Google Scholar
• Hsu , D. H. 2007 . Experienced Entrepreneurial Founders, Organizational Capital, and Venture Capital Funding . Research Policy , 36 ( 5 ) : 722 – 741 .
   Web of Science ®Google Scholar
• Jensen , M. C. and Meckling , W. 1976 . Theory of the Firm – Managerial Behavior, Agency Costs and Ownership Structure . Journal of Financial Economics , 3 ( 4 ) : 305 – 360 .
   Web of Science ®Google Scholar
• Kahneman , D. , Knetsch , J. L. and Thaler , R. H. 1991 . Anomalies – The Endowment Effect, Loss Aversion, and the Status Quo Bias . Journal of Economic Perspectives , 5 ( 1 ) : 193 – 206 .
   Web of Science ®Google Scholar
• Kahneman , D. , Slovic , P. and Tversky , A. 1982 . Judgment under Uncertainty: Heuristics and Biases , Cambridge , England : Cambridge University Press .
   Google Scholar
• Kahneman , D. and Tversky , A. 1979 . Prospect Theory: An Analysis of Decision under Risk . Econometrica , 47 ( 2 ) : 263 – 291 .
   Web of Science ®Google Scholar
• Kahneman , D. and Tversky , A. 1982 . The Psychology of Preference . Scientific American , 246 ( 1 ) : 136 – 142 .
   Web of Science ®Google Scholar
• Kahneman , D. and Tversky , A. 1984 . Choices, Values and Frames . American Psychologist , 39 ( 4 ) : 341 – 350 .
   Web of Science ®Google Scholar
• Kanuk , L. and Berenson , C. 1975 . Mail Surveys and Response Rate: A Literature Review . Journal of Marketing Research , 22 ( 4 ) : 440 – 453 .
   Web of Science ®Google Scholar
• Kaplan , S. N. and Schoar , A. 2005 . Private Equity Performance: Returns, Persistence, and Capital Flows . Journal of Finance , 60 ( 4 ) : 1791 – 1823 .
   Web of Science ®Google Scholar
• Kempf , A. and Ruenzi , S. 2006 . Status Quo Bias and the Number of Alternatives: An Empirical Illustration from the Mutual Fund Industry . Journal of Behavioral Finance , 7 ( 4 ) : 204 – 213 .
   Google Scholar
• Lee , A. Y. and Labroo , A. A. 2004 . The Effect of Conceptual and Perceptual Fluency on Brand Evaluation . Journal of Marketing Research , 41 ( 2 ) : 151 – 165 .
   Web of Science ®Google Scholar
• Lerner , J. and Schoar , A. 2004 . The Illiquidity Puzzle: Theory and Evidence from Private Equity . Journal of Financial Economics , 72 ( 1 ) : 3 – 40 .
   Web of Science ®Google Scholar
• Lerner , J. , Schoar , A. and Wongsunwai , W. 2007 . Smart Institutions, Foolish Choices: The Limited Partner Performance Puzzle . Journal of Finance , 62 ( 2 ) : 731 – 764 .
   Web of Science ®Google Scholar
• Ljungqvist , A. , Hochberg , Y. V. and Vissing-Jorgensen , A. 2009 . Informational Hold-Up and Performance Persistence in Venture Capital . Working Paper, Finance Working Paper No. 08-023, New York University
   Google Scholar
• MacMillan , I. C. , Siegel , R. and Narasimha , P. N. 1985 . Criteria Used by Venture Capitalists to Evaluate New Venture Proposals . Journal of Business Venturing , 1 ( 1 ) : 119 – 128 .
   Google Scholar
• Maddala , G. S. 1991 . A Perspective on the Use of Limited-Dependent and Qualitative Variables Models in Accounting Research . Accounting Review , 66 ( 4 ) : 788 – 807 .
   Web of Science ®Google Scholar
• Miller , C. , Cardinal , L. and Glick , W. 1997 . Retrospective Reports in Organizational Research: A Reexamination of Recent Evidence . Academy of Management Journal , 40 ( 6 ) : 189 – 204 .
   Google Scholar
• Norton , E. 1995 . Venture Capital as an Alternative Means to Allocate Capital: An Agency-Theoretic View . Entrepreneurship Theory and Practice , 20 ( 2 ) : 19 – 29 .
   Google Scholar
• Norton , E. C. , Wang , H. and Ai , C. 2004 . Computing Interaction Effects and Standards Errors in Logit and Probit Models . Stata Journal , 4 ( 2 ) : 154 – 167 .
   Web of Science ®Google Scholar
• Patel , J. , Zeckhauser , R. and Hendricks , D. 1991 . The Rationality Struggle: Illustrations from Financial Markets . American Economic Review , 81 ( 2 ) : 232 – 236 .
   Web of Science ®Google Scholar
• Phalippou , L. 2010 . Venture Capital Funds: Flow-Performance Relationship and Performance Persistence . Journal of Banking and Finance , 34 ( 3 ) : 568 – 577 .
   Web of Science ®Google Scholar
• Podolny , J. 1994 . Market Uncertainty and the Social Character of Economic Exchange . Administrative Science Quarterly , 39 ( 3 ) : 458 – 483 .
   Web of Science ®Google Scholar
• Podsakoff , P. M. , MacKenzie , B. , Lee , J.-Y. and Podsakoff , N. P. 2003 . Common Method Biases in Behavioral Research: A Critical Review of the Literature and Recommended Remedies . Journal of Applied Psychology , 88 ( 5 ) : 879 – 903 .
   PubMed Web of Science ®Google Scholar
• Podsakoff , P. M. and Organ , D. W. 1986 . Self-Reports in Organizational Research: Problems and Prospects . Journal of Management , 12 ( 4 ) : 531 – 544 .
   Web of Science ®Google Scholar
• Prentice , R. L. and Pyke , R. 1979 . Logistic Disease Incidence Models and Case-Control Studies . Biometrika , 66 ( 3 ) : 403 – 411 .
   Web of Science ®Google Scholar
• Roberts , P. W. and Dowling , G. R. 2002 . Corporate Reputation and Sustained Superior Financial Performance . Strategic Management Journal , 23 ( 12 ) : 1077 – 1093 .
   Web of Science ®Google Scholar
• Ross , S. 1973 . The Economic Theory of Agency: The Principal's Problem . American Economic Review , 63 ( 2 ) : 134 – 139 .
   Web of Science ®Google Scholar
• Rubaltelli , E. , Rubichi , S. , Savadori , L. , Tedeschi , M. and Ferretti , R. 2005 . Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias . Journal of Behavioral Finance , 6 ( 1 ) : 19 – 26 .
   Google Scholar
• Sahlman , W. A. 1990 . The Structure and Governance of Venture-Capital Organizations . Journal of Financial Economics , 27 ( 2 ) : 473 – 521 .
   Web of Science ®Google Scholar
• Samuelson , W. and Zeckhauser , R. 1988 . Status Quo Bias in Decision Making . Journal of Risk and Uncertainty , 1 ( 1 ) : 7 – 59 .
   Google Scholar
• Schmalensee , R. 1982 . Product Differentiation Advantages of Pioneering Brands . American Economic Review , 72 ( 3 ) : 349 – 365 .
   Web of Science ®Google Scholar
• Schwenk , C. R. 1988 . The Cognitive Perspective on Strategic Decision Making . Journal of Management Studies , 25 ( 1 ) : 41 – 55 .
   Web of Science ®Google Scholar
• Scott , A. J. and Wild , C. J. 1986 . Fitting Logistic Models Under Case-Control or Choice Based Sampling . Journal of the Royal Statistical Society, Series B (Methodological) , 48 ( 2 ) : 170 – 182 .
   Web of Science ®Google Scholar
• Shane , S. and Cable , D. 2002 . Network Ties, Reputation, and the Financing of New Ventures . Management Science , 48 ( 3 ) : 364 – 381 .
   Web of Science ®Google Scholar
• Shane , S. and Stuart , T. 2002 . Organizational Endowments and the Performance of University Start-Ups . Management Science , 48 ( 1 ) : 154 – 170 .
   Web of Science ®Google Scholar
• Shepherd , D. A. and Zacharakis , A. 1999 . Conjoint Analysis: A New Methodological Approach for Researching the Decision Policies of Venture Capitalists . Venture Capital , 1 ( 3 ) : 197 – 217 .
   Google Scholar
• Shepherd , D. A. , Zacharakis , A. and Baron , R. A. 2003 . VCs’ Decision Processes - Evidence Suggesting More Experience May Not Always Be Better . Journal of Business Venturing , 18 ( 3 ) : 381 – 401 .
   Web of Science ®Google Scholar
• Thaler , R. 1980 . Toward a Positive Theory of Consumer Choice . Journal of Economic Behavior and Organization , 1 ( 1 ) : 39 – 60 .
   Web of Science ®Google Scholar
• Tversky , A. and Kahneman , D. 1974 . Judgment under Uncertainty: Heuristics and Biases . Science , 185 ( 4157 ) : 1124 – 1131 .
   PubMed Web of Science ®Google Scholar
• Tversky , A. and Kahneman , D. 1991 . Loss Aversion in Riskless Choice: A Reference Dependent Model . Quarterly Journal of Economics , 106 ( 4 ) : 1039 – 1061 .
   Web of Science ®Google Scholar
• Uzzi , B. 1996 . The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect . American Sociological Review , 61 ( 4 ) : 674 – 698 .
   Web of Science ®Google Scholar
• Uzzi , B. 1999 . Embeddedness in the Making of Financial Capital: How Social Relations and Networks Benefit Firms Seeking Financing . American Sociological Review , 64 ( 4 ) : 481 – 505 .
   Web of Science ®Google Scholar
• Venkataraman , S. 1997 . The Distinctive Domain of Entrepreneurship Research . Advances in Entrepreneurship Research, Firm Emergence and Growth , 3 : 119 – 138 .
   Google Scholar
• Walske , J. M. and Zacharakis , A. 2009 . Genetically Engineered: Why Some Venture Capital Firms are More Successful than Others . Entrepreneurship Theory and Practice , 33 ( 1 ) : 297 – 318 .
   Web of Science ®Google Scholar
• Whittlesea , B. W. A. 1993 . Illusions of Familiarity . Journal of Experimental Psychology: Learning, Memory, and Cognition , 19 ( 6 ) : 1235 – 1253 .
   Web of Science ®Google Scholar
• Wiersema , M. and Bowen , H. 2009 . The Use of Limit Dependent Variable Techniques in Strategy Research: Issues and Methods . Strategic Management Journal , 30 ( 6 ) : 679 – 692 .
   Web of Science ®Google Scholar
• Zacharakis , A. L. and Meyer , D. G. 1998 . A Lack of Insight: Do Venture Capitalists Really Understand Their Own Decision Process . Journal of Business Venturing , 13 ( 1 ) : 57 – 76 .
   Web of Science ®Google Scholar
• Zacharakis , A. L. and Meyer , D. G. 2000 . The Potential of Actuarial Decision Models – Can They Improve the Venture Capital Investment Decision . Journal of Business Venturing , 15 ( 4 ) : 323 – 346 .
   Web of Science ®Google Scholar
• Zacharakis , A. L. and Shepherd , D. A. 2001 . The Nature of Information and Overconfidence on VCs’ Decision Making . Journal of Business Venturing , 16 ( 4 ) : 311 – 332 .
   Web of Science ®Google Scholar
• Zhang , J. 2011 . The Advantage of Experienced Start-Up Founders in Venture Capital Acquisition: Evidence from Serial Entrepreneurs . Small Business Economics , 36 ( 2 ) : 187 – 208 .
   Web of Science ®Google Scholar