EMPLOYEE EQUITY INCENTIVES AND VENTURE CAPITALIST INVOLVEMENT: EXAMINING THE EFFECTS ON IPO PERFORMANCE

James W. Westerman (), Scott W. Geiger and Linda A. Cyr
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James W. Westerman: Appalachian State University, Walker College of Business Administration, ASU Box 32089, Boone, NC 28608-2089, USA
Scott W. Geiger: University of South Florida St. Petersburg, College of Business, 140 7th Ave South, St. Petersburg, FL 33701, USA
Linda A. Cyr: Tapestry Networks, 45 Church St. #3, Boston, MA 02116, USA

Journal of Developmental Entrepreneurship (JDE), 2008, vol. 13, issue 04, 409-423

Abstract: We examine the effects of venture capitalist involvement and equity incentives for all employees on the performance of initial public offering firms. Data was collected from 402 IPO firms, representing 242 non-VC backed and 160 VC backed firms. Results indicate venture capitalists positively influence the likelihood the portfolio firm will offer equity incentives to all employees. Consistent with the agency theory argument that monitoring and incentives can behave as complements to one another, the results suggest venture capitalist backing and incentive stock options for all employees operate in concert to have a positive effect on stock price performance three years after the initial public offering.

Keywords: IPO; venture capital; employee incentives; agency theory; stock options (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S1084946708001058

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