Venture Capitalists in Mature Public Firms

69 Pages Posted: 6 May 2012 Last revised: 14 May 2014

See all articles by Ugur Celikyurt

Ugur Celikyurt

Koc University - College of Administrative Sciences and Economics

Merih Sevilir

Indiana University - Kelley School of Business - Department of Finance

Anil Shivdasani

University of North Carolina Kenan-Flagler Business School

Date Written: May 5, 2012

Abstract

Using data on the backgrounds of board members of S&P companies, we show that venture capitalists (VCs) play an important role in mature public firms long after their initial public offering (IPO). Almost one-third of mature public companies have at least one VC director on their board. VC presence on the board is not limited to mature companies that were VC-backed at the time of their IPO – over one-third of mature firms with VC directors were not VC-backed at the time of their IPO. Appointments of VC directors to the board are followed by increases in R&D intensity, innovation output, and greater deal activity with other VC-backed firms. VC director appointments are associated with positive announcement returns and are followed by an improvement in operating performance. Finally, firms experience higher announcement returns from acquisitions of VC-backed targets following the appointment of a VC director to the board. Our results show that in addition to their function as providers of finance, monitoring and advice for small private firms, VCs play a significant role in mature public firms as well. Hence, we illustrate a much broader role for VCs than has been established in the literature.

Suggested Citation

Celikyurt, Ugur and Sevilir, Merih and Shivdasani, Anil, Venture Capitalists in Mature Public Firms (May 5, 2012). UNC Kenan-Flagler Research Paper No. 2013-4. Available at SSRN: https://ssrn.com/abstract=2051522 or http://dx.doi.org/10.2139/ssrn.2051522

Ugur Celikyurt

Koc University - College of Administrative Sciences and Economics ( email )

Rumelifeneri Yolu
Sariyer 80910, Istanbul
Turkey

Merih Sevilir

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

Anil Shivdasani (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
919-962-3182 (Phone)
919-962-2068 (Fax)

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