How Venture Capital Institutions Affect the Structure of Startups’ Board of Directors

Yingkai, Tang; Wu, Maomin; Cao, Qilin; Zhou, Jing

doi:10.1007/978-3-642-55122-2_75

Cited by 3 publications

(1 citation statement)

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“…Generally, directors appointed by VCs either have profound industry insight, keen industry risk prediction capability, or excellent business management capability. Thus, these directors can provide guidance and valuable assistance for portfolio firms in decisionmaking, operation, and market development (Lerner, 1995;Proksch et al, 2017;Tang et al, 2014;Zhang et al, 2020), so that they can adjust the product R&D strategy in time, and then improve the input and allocation efficiency of innovation factors. Furthermore, directors appointed by VCs often enjoy extensive social networks involving financial institutions and regulatory authorities.…”

Section: Mechanisms Underlying Vc Investmentmentioning

confidence: 99%

Is venture capital a catalyst for innovative entrepreneurship in China? Empirical analysis based on the PSM‐DID method

Wang

Ran

et al. 2021

Manage Decis Econ

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Using the data of Chinese nonfinancial listed firms between 2005 and 2019, we adopt the propensity score matching‐difference‐in‐differences (PSM‐DID) model to empirically examine the relationship between VC and innovative entrepreneurship (IE). We find that IE is significantly improved after VC entry, and the promoting effect follows an inverted U‐shape over time. Mechanism tests reveal that the effect of VC on IE works mainly through three channels: alleviating financing constraints, enhancing R&D capability, and appointing directors. Furthermore, VC institutions with joint investment strategy and high shareholding ratio play a more significantly role in promoting IE; for industries with higher competition and area with good property rights protection, VC elevates IE more significantly. Finally, the results reveal a complementary relationship between VC and IE in their effect on firm value, especially for firms in eastern China, followed by those in central China.

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Section: Mechanisms Underlying Vc Investmentmentioning

confidence: 99%