Venture capital, corporate governance, and financial stability of IPO firms

Woody M. Liao, Chia-Chi Lu and Hsuan Wang

Emerging Markets Review, 2014, vol. 18, issue C, 19-33

Abstract: This study investigates the effects of venture capital investments on corporate governance and financial stability of IPO-firms in the emerging markets. We find that VC-backed firms have less agency problems related to excess control than non-VC-backed firms at the time of IPO, and venture capitalists are more likely to improve the excess control problem in firms with weak-governance-structure than those with strong-governance-structure. We also find that VC-backed firms are less likely to encounter financial difficulty than non-VC-backed firms. Taken together, VC investments play a role in mitigating excess control and providing positive financial stability in the emerging markets.

Keywords: Corporate governance; Excess control; Venture capital investments; Financial stability; Initial public offerings (search for similar items in EconPapers)
JEL-codes: G14 G24 G32 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:18:y:2014:i:c:p:19-33

DOI: 10.1016/j.ememar.2013.11.002

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