| Summary: | 博士 === 國立政治大學 === 企業管理學系 === 89 === Although recent work attempts to explore what venture capitalists do and whether venture capitalists'' involvement adds value for venture-capital-backed firms, it does not investigate the ways in which venture capitalists add value to their portfolio companies. Moreover, recent empirical research usually investigates whether venture capitalists'' involvement reduces underpricing when their portfolio firms going public, but it seldom explicitly examines the effect of the presence of venture capitalists on operating performance of venture-capital-backed firms. As a matter of fact, a number of issues relate to the relationship between venture capitalists and entrepreneurs have not been fully addressed. Therefore, the objective of this study is to fill both theoretical and empirical gaps.
This study applies agency theory which captures the essence between venture capitalists and entrepreneurs, and use Von Neumann-Morgenstern utility function to analyze the effect of venture capitalists'' involvement on their portfolio firms'' operating performance and skills. Our theoretical model not only considers the importance of new technology in modern economies, but also includes the possibility that these two control mechanisms, monitoring and incentives, might be complementary.
Moreover, empirical results of this study reveal several important findings. First, we contrast venture-capital-backed firms with companies that have no venture-capital backing. Our empirical results indicate operating performance and after-market stock performance of firms with venture-capital backing are both inferior to that of firms without such backing, and the differences are statistically significant. However, venture-capital-backed firms seem to have lower levels of firm risk.
Secondly, empirical results provide evidence that the fraction of equity holdings of the lead venture capitalist, the number of venture capitalists, the number of the venture-capital-backed firm''s board seats held by venture capitalists, stock compensation system and the length of time that venture capitalists have invested are all positively associated with operating performance of venture-capital-backed firms.
In addition, the number of the venture-capital-backed firm''s board seats held by venture capitalists, stock compensation system, the age of the lead venture and the length of time that venture capitalists have invested are positively associated with after-market stock performance of firms with venture-capital backing. Not surprisingly, empirical results also provide evidence that venture-capital-backed firms go public earlier than non-venture-capital-backed firms.
Overall, the results of this study support the idea that venture capitalists do provide much more than financing to their portfolio firms. However, in a venture capital setting, adverse selection, grandstanding and money-recycling are important concerns; these concerns might explain why performance of venture-capital-backed firms are significantly inferior to that of non-venture-capital-backed firms. Indeed, our findings support the notion that venture capitalists'' investment behavior does influence performance of their portfolio firms in a number of ways due to their skills, expertise and monitoring abilities.
|
|---|
