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The Determinants of Board Structure at the Initial Public Offering


Malcolm P. Baker


Harvard Business School; National Bureau of Economic Research (NBER)

Paul A. Gompers


Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
August 2002


Abstract:     
This paper describes board size and composition and investigates the role of venture capital in a sample of 1,116 IPO firms. First, venture capital-backed firms have fewer insider and instrumental directors and more independent outsiders. Second, we consider board composition as the outcome of a bargain between the CEO and outside shareholders. Representation of independent outsiders on the board decreases with the power of the CEO - tenure and voting control - and increases with the power of outside investors - venture capital backing and venture firm reputation. Third, within the sample of venture financed firms and also consistent with a bargaining model, the probability that a founder remains as CEO is decreasing in venture firm reputation. Finally, we examine the influence of venture capital backing and board structure on firm outcomes in the ten years after the IPO.

Note: Previously titled: The Determinants of Board Structure and Function in Entrepreneurial Firms

Number of Pages in PDF File: 43

JEL Classification: G24, G30

working papers series


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Date posted: July 24, 2000 ; Last revised: January 22, 2009

Suggested Citation

Baker, Malcolm P. and Gompers, Paul A., The Determinants of Board Structure at the Initial Public Offering (August 2002). Available at SSRN: http://ssrn.com/abstract=236035 or http://dx.doi.org/10.2139/ssrn.236035

Contact Information

Malcolm P. Baker (Contact Author)
Harvard Business School ( email )
Boston, MA 02163
United States
617-495-6566 (Phone)
HOME PAGE: http://www.people.hbs.edu/mbaker
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Paul A. Gompers
Harvard Business School - Finance Unit ( email )
Boston, MA 02163
United States
617-495-6297 (Phone)
617-496-8443 (Fax)
Harvard University - Entrepreneurial Management Unit ( email )
Cambridge, MA 02163
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Feedback to SSRN (Beta)


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