Venture Capital and Corporate Governance in the Newly Public Firm

Download or read book Venture Capital and Corporate Governance in the Newly Public Firm written by Yael V. Hochberg and published by . This book was released on 2016 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine the effects of venture capital backing on the corporate governance of the entrepreneurial firm at the time of transition from private to public ownership. Using a selection model framework that instruments for venture backing with variations in the supply of venture capital, I conduct three sets of tests comparing corporate governance in venture- and non-venture-backed IPO firms. Venture-backed firms have lower levels of earnings management, more positive reactions to the adoption of shareholder rights agreements, and more independent board structures than similar non-venture-backed firms, consistent with better governance. These effects are not common to all pre-IPO large shareholders.