Strategic Alliances and Corporate Governance in Newly Public Firms: Evidence from Venture Backed IPOs
59 Pages Posted: 16 Mar 2010
Date Written: March 15, 2010
We investigate the corporate governance of venture capital (VC) backed IPOs that enter into strategic alliances. Startups can have alliances with outside strategic partners and with parents of corporate VCs (CVCs), who primarily invest in startups for strategic reasons. Both CVCs and outside strategic alliance partners can influence an IPO firm’s corporate governance. We find that firms with strategic alliances have greater independent director representation, more staggered boards and forced CEO turnovers and smaller percentage of new shares and secondary share sales. Comparing the governance of startups with strategically oriented CVCs backing to those with outside strategic alliance partners shows stronger effects in firms backed by CVCs.
Keywords: Strategic alliances, corporate governance, venture capital, IPOs
JEL Classification: G30, G34, G39
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