Venture Capital Reputation, Post-IPO Performance and Corporate Governance

56 Pages Posted: 22 Jun 2006 Last revised: 8 Sep 2011

C. N. V. Krishnan

Case Western Reserve University - Department of Banking & Finance

Vladimir I. Ivanov

US Securities & Exchange Commission

Ronald W. Masulis

University of New South Wales - Australian School of Business; European Corporate Governance Institute (ECGI); Financial Research Network (FIRN); National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER)

Ajai K. Singh

Department of Finance, University of Central Florida

Date Written: December 1, 2009

Abstract

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

Suggested Citation

Krishnan, C. N. V. and Ivanov, Vladimir I. and Masulis, Ronald W. and Singh, Ajai K., Venture Capital Reputation, Post-IPO Performance and Corporate Governance (December 1, 2009). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming; ECGI - Finance Working Paper No. 265/2009. Available at SSRN: https://ssrn.com/abstract=910982

C. N. V. Krishnan

Case Western Reserve University - Department of Banking & Finance ( email )

10900 Euclid Ave.
PBL 363
Cleveland, OH 44106-7235
United States
216-368-2116 (Phone)

HOME PAGE: http://weatherhead.case.edu/faculty/c-n-v-krishnan

Vladimir Ivanov

US Securities & Exchange Commission ( email )

Washington, DC
United States
202-551-5307 (Phone)

Ronald W. Masulis (Contact Author)

University of New South Wales - Australian School of Business ( email )

Sydney, NSW 2052
Australia
612-9385-5860 (Phone)
612-9385-6347 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

National University of Singapore (NUS) - Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Ajai K. Singh

Department of Finance, University of Central Florida ( email )

College of Business Administration
12744 Pegasus Drive
Orlando, FL 32816
United States
407-823-0761 (Phone)
407-823-6676 (Fax)

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