The Effects of Venture Capitalists on the Governance of Firms

54 Pages Posted: 14 Dec 2006 Last revised: 23 Jul 2015

See all articles by Stefano Bonini

Stefano Bonini

Stevens Institute of Technology - School of Business

Senem Alkan Aktuccar

Bocconi University

Antonio Salvi

Jean Monnet University

Multiple version iconThere are 2 versions of this paper

Date Written: July 10, 2011

Abstract

We test the impact of differential levels of capital injection and different regions of incorporation on the governance structure of portfolio companies.Using a unique hand-collected questionnaire-based dataset from 164 companies in 5 countries (US, UK, France, Germany, Spain and Sweden) we shed light on previously unexplored governance decisions. Our empirical results show that there is a strong and positive relationship between VCs’ funding and their influence on some factors like decisions on CEO hiring, executive compensation, board decisions and appointments. Employee incentives are also positively related to the proportion of VC funding. On the other hand, results show that the proportion of VC funding is only limitedly significant in explaining VC influence on strategy direction and investment planning. Our analysis though, offers strong evidence of remarkable regional differences between Europe and the US.

Keywords: Venture Capital, Corporate Governance

JEL Classification: G24, G32, G34

Suggested Citation

Bonini, Stefano and Alkan Aktuccar, Senem and Salvi, Antonio, The Effects of Venture Capitalists on the Governance of Firms (July 10, 2011). Available at SSRN: https://ssrn.com/abstract=951665 or http://dx.doi.org/10.2139/ssrn.951665

Stefano Bonini (Contact Author)

Stevens Institute of Technology - School of Business ( email )

Hoboken, NJ 07030
United States

Senem Alkan Aktuccar

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Antonio Salvi

Jean Monnet University ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

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