Venture Capital and Corporate Social Responsibility

44 Pages Posted: 28 Apr 2020 Last revised: 7 Jul 2021

See all articles by Cheng Cheng

Cheng Cheng

Hunan University

Yongqiang Chu

Belk College of Business, UNC Charlotte

Zijie Deng

Nanyang Business School, Nanyang Technological University

Bo Huang

Renmin University of China - School of Finance

Date Written: June 9, 2020

Abstract

We examine the impact on venture capital (VC) involvement and monitoring on their portfolio companies' corporate social responsibility (CSR) performance. Exploiting the timing of VC exit, we find that CSR performance of VC-backed companies improves after the exit of VC. Using the age of VC funds as an instrument for VC exit, we find that the effect is likely to be causal. We also find that portfolio firms' CSR performance declines after the introduction of direct high speed rail services between VC firms and their portfolio companies. Further analyses suggest that the effect is largely driven by inexperienced, bad performing, and less reputable VCs.

Keywords: Venture Capital, Corporate Social Responsibility, Monitoring, Board of Directors

JEL Classification: G23, G24, L21, M14

Suggested Citation

Cheng, Cheng and Chu, Yongqiang and Deng, Zijie and Huang, Bo, Venture Capital and Corporate Social Responsibility (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3568723 or http://dx.doi.org/10.2139/ssrn.3568723

Cheng Cheng

Hunan University ( email )

Shijiachong Road 109#
Changsha, Hunan 410079
China

Yongqiang Chu (Contact Author)

Belk College of Business, UNC Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States
7046877695 (Phone)

Zijie Deng

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore
+65-93554273 (Phone)

Bo Huang

Renmin University of China - School of Finance

Ming De Main Building
Renmin University of China
Beijing, Beijing 100872
China

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