Board dynamics over the startup life cycle

Michael Ewens and Nadya Malenko

No 15024, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the dynamics of venture capital (VC)-backed startup boards using novel data on director entry, exit, and characteristics. At formation, a typical board is entrepreneur-controlled. Independent directors join the median board after the second financing and hold a tie-breaking vote. Their presence is particularly likely when potential VC-entrepreneur conflicts are larger. At later stages, control switches to VCs and independent director characteristics change. These patterns align with key financial contracting theories, but also highlight unique roles of independent directors over the life cycle: mediation followed by advising. Independent directors thus represent another potential source of value-add to startup performance.

Keywords: Venture capital; Corporate governance; Board of directors; Independent directors; Allocation of control; Mediation role (search for similar items in EconPapers)
JEL-codes: G24 G34 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cwa and nep-sbm
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Board Dynamics over the Startup Life Cycle (2020)
Working Paper: Board Dynamics over the Startup Life Cycle (2020)
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