Do Venture Capitalists Give Founders Their Walking Papers?
Journal of Corporate Finance, Vol. 15, pp. 613–625, 2009
Posted: 19 Sep 2010
Date Written: 2009
We investigate the impact of venture capitalists on the turnover of executives within a sample of nearly 46,500 German high-tech start-up companies founded between 1995 and 2004. We confirm that the presence of VCs increases the chances that the company will change the structure of its initial executive team. For the purposes of our analysis, we distinguish between different types of changes (somebody is replaced, the team is enlarged, the team shrinks). Additionally, we take a closer look at the subsample of venture-backed companies.We find that a small distance between the VCs and the companies they finance, as well as a larger total stake in the company owned by the VCs, goes hand-in-hand with an increased probability of changes in the initial executive teams.
Keywords: Venture capital, Executive turnover
JEL Classification: G24, G32
Suggested Citation: Suggested Citation