Wulf A. Kaal
University of St. Thomas, Minnesota – School of Law; European Corporate Governance Institute (ECGI)
Erik P. M. Vermeulen
Tilburg University – Department of Business Law; Philips Lighting – Legal Department; Tilburg Law and Economics Center (TILEC); Kyushu University – Graduate School of Law
Abstract:
Disruptive innovation creates increasing regulatory challenges. The reason for this is simple: Regulation is usually reactive, responding to facts. However, we currently live in a world of data, not facts. Regulation must therefore be proactive and dynamically responsive to data and trends. This paper discusses the following questions: (1) Why should regulators be proactive?, (2) When should regulators respond?, (3) What should regulators respond to? and (4) How should regulators respond? Using a dataset comprising over 77,000 venture capital deals with over 35,000 companies in the United States from 2005 to 2015, the paper shows how investment data can provide important feedback on innovation trends and associated risks for regulators, optimize the timing of regulation, and support anticipatory rulemaking.
Number of Pages in PDF File: 42
Keywords: Disruptive Innovation, Venture Capital, Venture Investments, Dynamic Regulation, Feedback Effects, Optimized Information for Regulation, Anticipatory Regulation, Big Data
JEL Classification: K20, K23, K32, L43, L5, O31, O32
Wulf Kaal 