Allocation of Attention to Portfolio Companies and the Performance of Venture Capital Firms

Jääskeläinen, Mikko; Maula, Markku; Seppä, Tuukka

doi:10.1111/j.1540-6520.2006.00117.x

Cited by 98 publications

(88 citation statements)

References 61 publications

(133 reference statements)

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“…By syndicating deals, VC fi rms are able to increase the portfolio they can optimally manage through resource sharing ( Jääskeläinen et al, 2006 ;Kanniainen and Keuschnigg, 2003 ). VC fi rms can access more information by syndicating with other reputable VC fi rms.…”

Section: Syndicated Private Equity Investments In Ipo Firmsmentioning

confidence: 99%

Corporate Governance in IPOs

Filatotchev

Allcock

2013

Oxford Handbooks Online

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corporate governance in ipos 423 investors ( Bruton et al., 2010 ). An entrenched founder-CEO may also try to retain a leadership position even when his/her skills become inadequate to new challenges faced by the fi rm ( Nelson, 2003 ). As a result of these information asymmetries, there are potential agency costs when a fi rm experiences an IPO since managers may not reveal actions within the fi rm or do not take certain actions that maximize the fi rm benefi t ( Sanders and Boivie, 2004 ).At IPO investors recognize the potential impact of the agency costs associated with information asymmetries, and they will therefore anticipate potential agency costs and price-protect themselves, thus leading to an IPO discount. Prior research approximates this discount by a lower industry-adjusted off er price/book or price/sales ratios (e.g. Chahine and Filatotchev, 2008 ), while others associate it with greater underpricing, measured by the diff erence between the fi rst-day-trading closing price and the off er price (e.g. Daily et al., 2003 ), suggesting that the aft ermarket price provides a good proxy for an intrinsic value of the IPO fi rm. Some researchers, however, argue that the uncertainties and information asymmetries cannot be resolved on the fi rst day of trading, and suggest using longer-term proxies for the stock market discount ( Aggarwal and Rivoli, 1990 ; Loughran et al., 1994 ).However, the IPO team may use corporate governance-related signals that allow potential investors to better understand the true value of the fi rm and reduce risks of agency problems, which in turn can improve the IPO fi rm's performance ( Sanders and Boivie, 2004 ). Corporate governance studies in the IPO context have recognized a wide range of potential "good governance signals" that include board characteristics, executive incentives, and the governance roles of early stage investors. Th ese governance factors play a dual role in addressing two types of agency confl icts in an IPO fi rm. First, they may convey important signals about the "quality" of IPO fi rm, and this may reduce the extent of adverse selection problems. For example, by attracting prestigious and experienced independent board members, an IPO fi rm can diff erentiate itself from other "poor quality" IPOs. At the same time, these independent directors may improve the extent and quality of monitoring, which imposes constraints on managerial discretion and reduces moral hazard-type agency confl icts. Likewise, venture capitalist may play important certifi cation and monitoring roles that aff ect both types of agency confl icts. By carefully selecting their investment targets, they certify the quality of fi rms they bring to the stock market. In addition, venture capitalists (VCs) oft en retain their ownership aft er the fl otation, and their objectives and post-issue monitoring incentives may be aligned with public market investors ( Bruton et al., 2010 ).A central premise of this research is that corporate governance factors may be important signals to investors w...

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Section: Syndicated Private Equity Investments In Ipo Firmsmentioning

confidence: 99%

Corporate Governance in IPOs

Filatotchev

Allcock

2013

Oxford Handbooks Online

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“…En ce qui concerne la performance des investissements en CR, certains auteurs se sont intéressés aux facteurs qui peuvent l'influencer : l'âge, l'expé-rience (Sherpherd, Zacharakis et Baron, 2003) et le stade de développement de la SCR (Dimov et De Clercq, 2006), les objectifs stratégiques ou financiers poursuivis, le montant de financement et de contrôle par rapport au stade de développement de la firme, l'environnement (LeClaire, Hadden et Jaggers, 2001), la voie de sortie notamment par appel public à l'épargne (Wang et Sim, 2001), la motivation de l'entrepreneur et de ses salariés (Fellers, 2002), la taille du portefeuille et le degré de syndicalisation (Jääskeläinen, Maula et Seppä, 2006). Sur ce dernier point, étant donné l'effet négatif de la syndicalisation sur la performance des SCR, certaines recherches ont étudié les motivations de ce choix.…”

Section: Le Financement Par Capital-risque (Cr)unclassified

La recherche en finance entrepreneuriale

St‐Pierre

Fadil²

2011

Revue internationale P.M.E.

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La finance entrepreneuriale est un domaine de recherche qui se voulait émergent il y a près de trente ans et pour lequel certains chercheurs de renom ont proposé des agendas de recherche spécifiques et stimulants. Or le recensement de plusieurs centaines d’articles publiés révèle que les auteurs ont centré leur attention sur des questions de recherche traditionnelles, laissant souvent de côté les préconisations des experts qui recommandaient notamment d’inclure l’entrepreneur dans les travaux et d’emprunter à la littérature en entrepreneuriat des méthodes et théories pouvant aider à mieux comprendre les questions financières des PME. L’objet de cet article est de faire un survol des travaux réalisés au cours des quinze dernières années en regard des besoins de connaissances spécifiques permettant de favoriser la création et l’émancipation des PME, grâce, notamment, à un financement adéquat. À la vue de ce qui nous semble être un écart entre les connaissances disponibles et celles qui seraient souhaitables selon l’OCDE, et en nous situant dans un contexte de modification de l’environnement d’affaires mondial, nous proposons aux chercheurs intéressés à contribuer au domaine de la finance entrepreneuriale quelques pistes de recherche pour les travaux futurs.

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“…Post-investment monitoring and adding value are also common management practice in the VC industry with VC fund managers usually involved in the investee companies' management and board (Gorman & Sahlman, 1989;Jääskeläinen, Maula, & Seppä, 2006). It is nonetheless not straightforward to determine how this practice contributes individually to the ventures' development and success along with other measures, although their collective influence is obvious.…”

Section: Classic Venture Capital Theorymentioning

confidence: 99%

Impact of Venture Capital Investment Syndication on Enterprise Lifecycle and Success

Siddiqui¹,

Hossain²

2016

IJEF

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The article investigates the impact of venture capital investment and investment syndication on enterprise lifecycle and success using the exit history of venture capital backed companies in Australia. It is observed that the venture capital backed companies tend to outperform those which are not while companies receiving syndicated venture capital investment tend to outperform the other venture capital backed companies. Based on the classic venture capital investment theory, we argue that venture capitalists essentially engage in superior venture selection through pre-investment screening and contribute to entrepreneurial development through post-investment monitoring and value creation. We then empirically investigate the lifecycle of the Australian venture capital backed companies from company formation to first venture capital financing round to exit. Survival duration of the ventures, investment growth and exit status are specifically analysed to capture the lifecycle. The findings show that the survival duration prior and post venture capital investment, venture capital investment growth in successive rounds and investment syndication increase the probably of success for the ventures.

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Allocation of Attention to Portfolio Companies and the Performance of Venture Capital Firms

Cited by 98 publications

References 61 publications

Corporate Governance in IPOs

Corporate Governance in IPOs

La recherche en finance entrepreneuriale

Impact of Venture Capital Investment Syndication on Enterprise Lifecycle and Success

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