Title

Venture Capitalist Monitoring: Evidence From Governance Structures

Keywords

Governance; IPO; Venture capitalist

Abstract

We examine the impact of venture capitalist (VC) involvement, quality and exit on corporate governance structures at the time of and subsequent to an initial public offering (IPO). Venture capital backed firms utilize governance structures with greater levels of monitoring at the time of an IPO compared to non-backed firms, but this difference begins to dissipate over time. While short-lived, IPOs backed by high quality VCs have greater overall monitoring levels than those IPOs backed by low quality VCs. IPOs backed by high quality VCs use significantly more equity-based compensation than their low quality counterparts. Finally, the exit of a VC materially alters the governance structure of firms. Measures of governance decline following the departure of a venture capital firm. Overall, the presence of a venture capitalist affects governance structures of firms both at the IPO and through the early years as public firms. © 2008 The Board of Trustees of the University of Illinois.

Publication Date

5-1-2009

Publication Title

Quarterly Review of Economics and Finance

Volume

49

Issue

2

Number of Pages

265-282

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.qref.2008.05.001

Socpus ID

64649084868 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/64649084868

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