Venture Capital Reputation, Post-IPO Performance, and Corporate Governance

C. N. V. Krishnan, Vladimir I. Ivanov, Ronald Masulis and Ajai K. Singh

Journal of Financial and Quantitative Analysis, 2011, vol. 46, issue 5, 1295-1333

Abstract: We examine the association of a venture capital (VC) firm’s reputation with the post-initial public offering (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 that 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.

Date: 2011
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