Business, Management and Accounting
4 years ago

Venture capitalists wield significant influence over firm governance decisions worldwide.

Corporate Governance An International Review
The Effects of Venture Capitalists on the Governance of Firms
Stefano Bonini, Senem Alkan, Antonio Salvi

Paper Summary

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The article explores how venture capitalists influence the decisions made by companies they invest in. The researchers studied 164 companies in Europe and the US and found that venture capitalists have a strong impact on CEO hiring, executive compensation, and board decisions. They also discovered that employee incentives are linked to the amount of funding from venture capitalists. However, the influence on strategy direction and investment planning was less significant. The study shows that governance decisions vary between countries, suggesting that a one-size-fits-all approach to corporate governance may not be effective.