Venture Capital Reputation, Post-IPO Performance and Corporate Governance
56 Pages Posted: 22 Jun 2006 Last revised: 8 Sep 2011
Date Written: December 1, 2009
We examine the association of a venture capital (VC) firm’s reputation with the post-IPO long-run performance of its portfolio firms. We find that VC reputation, measured by the past market share of VC-backed IPOs, has significant positive associations with long-run firm performance measures. While more reputable VCs initially select better quality firms, more reputable VCs continue to be associated with superior long-run performance, even after controlling for VC selectivity. We find more reputable VCs exhibit more active post-IPO involvement in the corporate governance of their portfolio firms and this continued VC involvement positively influences post-IPO firm performance.
Keywords: Venture capital, Reputation, Initial Public Offerings, Post-IPO long-run performance, Post-IPO VC shareholdings and directorships, Corporate governance
JEL Classification: G24, G34, L33, M13
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