If you're a venture capitalist in China, you may want to steer clear of the country's startup scene, according to a study published in the American Journal of Tropical Economics.
The study, which looked at data from GEM-listed companies that received venture capital from 2009 to 2021, found that entrepreneurs and venture capitalists were "collusioning" to one another, the Los Angeles Times reports.
The study found that venture capitalists were more likely to invest in a company if they knew it was being valued at less than its actual worth.
"Venture capital plays a crucial role in fostering entrepreneurship and financing innovation, facilitating economic structural adjustments, and industrial transformation," the study's co-author says in a press release.
"Unethical behavior resulting from collusion behavior between venture capitalists and entrepreneurs also damages the capital market environment and harms firm development."
The study found that venture capitalists were more likely to invest in a company that was valued at less than its actual worth if they knew it was being valued at less than its actual worth, the Times notes.
According to the study, venture capitalists were more likely to invest in a company that was valued at more than its actual worth if they knew it was being valued at less than its actual worth.
The study's co-
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