Private Equity investment performance: Do social ties between venture capitalists and CEOs matter

Christophe Bonnet ()
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Christophe Bonnet: GDF - Gestion, Droit et Finance - EESC-GEM Grenoble Ecole de Management

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Abstract: Our area of interest is the relationship between Private Equity professionals and the CEOs of companies. Building on previous research on board-CEO relationship and on venture capital and management buyout governance, we aim at complementing the frequently used agency theory perspective by way of a social and behavioural perspective. Whereas agency theorists underline the role of independence between management and board, we think the success of private equity professionals lies in their ability to combine independence and control with trust, cooperation and support in their relationship with CEOs. The existence of social ties between VCs and CEOs is expected to produce antagonistic consequences, fostering cooperation and support but hampering control. We propose an original model formalising the relations between VC-CEO social ties, board processes, VC's roles vis à vis CEOs, and investment performance.

Keywords: trust; Private Equity; Venture Capital; Management buy-outs; corporate governance; board of directors; CEO; trust. (search for similar items in EconPapers)
Date: 2001
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Published in 2001, 21 p

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