Venture Governance: A New Horizon for Corporate Governance

Garg, Sam

doi:10.5465/amp.2017.0178

Cited by 24 publications

(36 citation statements)

References 72 publications

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“…As dynamic capabilities are important to enhance innovation and entrepreneurial behavior [33], it is also important to highlight that the literature has recently considered the governance characteristics and challenges of, not only incumbent companies, but innovative startup companies as well [55,56]. While dynamic board behavior can be considered as a promising area for research at large (energy) companies, ventures also "present an attractive research context that offers new opportunities for corporate governance scholars" [57] (p. 252). Sustainability-oriented research, however, has not yet focused on CG mechanisms of startups, but rather on CSR activities and impacts, which have been wellknown topics at established companies.…”

Section: The Background Of Dynamic Corporate Governancementioning

confidence: 99%

Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period

2022

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Recent complex changes of the organizational environment urge the boards of directors of energy corporations to step up quickly in crises (e.g., COVID-19) and foster innovation, to seize new strategic opportunities (e.g., environmental, social, and governance (ESG) investments). The purpose of the study is to provide in-depth analyses of ESG projects during the COVID-19 pandemic, through the lens of an emerging theoretical approach, dynamic corporate governance (CG). The research is built on the multi-case study method at large energy companies and energy startups. The research goal was to empirically analyze theoretical opportunities of dynamic board behavior in this research context. The major findings show that ESG projects faced serious challenges in the fast-changing organizational environment generated by COVID-19, which induced board intervention regarding innovation, networks, and organizational changes. This study is among the first to offer a novel theoretical viewpoint, by integrating CG and strategic management theories, besides the already dominant financial and reporting aspects. From a practical perspective, our conclusions might direct the attention of boards of directors toward innovation, networks, and organizational changes, in order to enable adaptation in turbulent times and increase sustainability in the social and environmental dimensions.

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Section: The Background Of Dynamic Corporate Governancementioning

confidence: 99%

Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period

2022

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“…Young public firms are an appropriate setting for studying this relationship, seeing that founders may remain involved in their firm, after it goes public, and continue to have a powerful influence over it (Garg et al, 2018), more so than in larger, older public firms. As such, we answer calls for corporate governance literature to look beyond its traditional focus of large, mature firms (Garg, 2020). Specifically, we gain new insights on the determinants of firm value in young public firms (Dawson et al, 2018) by showing that, through their ownership power, founders continue to matter in this type of firm, where they may still be present and powerful because of the smaller size, younger age, and lower structural complexity compared to more established public companies (Lungeanu & Zajac, 2019).…”

Section: Discussionmentioning

confidence: 99%

“…As such, our study supports the idea that founder teams matter not only at startup but even after the firm goes public (Abebe et al, 2020; Nelson, 2003). At the same time, by contributing to the conversation on young public firms, we answer calls in the corporate governance literature to move beyond its predominant focus on large, mature public firms (Filatotchev et al, 2006; Garg, 2020), which limits generalizability of findings to earlier stage firms in which founders tend to be more powerful influences (Garg et al, 2018; Lungeanu & Zajac, 2019). Second, drawing from the literature on ownership power (Emerson, 1962; Finkelstein, 1992; Mannix, 1993) and on power balance in dyads and small groups (Friedkin & Johnsen, 2011; Mannix, 1993), we show that the relationship between the ownership stake held by the main founder and firm value is moderated by the presence of cofounders, and that this moderating effect depends on the size of the founding team and on whether there is ownership power symmetry or asymmetry among founders.…”

Section: Introductionmentioning

confidence: 99%

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Founder teams and firm value in young public firms: An analysis of the moderating effect of founders' ownership power and team size

Dawson

Paeglis

Basu

2021

Corporate Governance

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Research Question/Issue Building on prior work on the relationship between founder ownership and firm value in young public firms, we test the moderating influence of the presence of cofounders, distinguishing between dyads and teams of three or more founders. Research Findings/Insights We test our hypotheses on a unique sample of 7162 observations from 959 US firms that have been public for less than 20 years and retained their founders. We show that the presence of one or more cofounders has distinct moderating effects on the relationship between main founder ownership and firm value, depending on the number and relative ownership power of the founders. Firm value benefits the most when there is ownership power symmetry in dyads of founders and ownership power asymmetry in teams of three or more founders. Theoretical/Academic Implications We make two contributions to the corporate governance literature. First, we take a more nuanced look at founders and their ownership power in young public firms and show that the presence of cofounders has an effect on firm value. Second, we show that this effect depends on the number of founders and on whether there is ownership power symmetry or asymmetry among founders. Overall, our study supports the view that founders continue to matter even after IPO. Practitioner/Policy Implications By shedding light on the effect of founders retaining ownership power on firm value after IPO, our findings may guide founders in their decisions to exit their business fully or partially and investors in their decisions whether to invest in public firms that retain their founders.

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“…Most studies on corporate boards investigate boards of large-scale open corporations (Daily et al, 2002, p. 398;Garg, 2020) and view the existence of boards as a given for all corporations. Each corporation is supposed to have a board, and the only sources of variance between firms typically studied in the finance literature are the We are very grateful to Geoffrey Wood, Co-editor-in-Chief of the British Journal of Management, and to the anonymous referees for their valuable suggestions which allowed us to significantly improve a prior version of the paper.…”

Section: Introductionmentioning

confidence: 99%

Kicking Off the Corporate Governance Lifecycle: Seed Funding, Venture Capital and the Nascent Board

Lang

Wirtz

2021

British J of Management

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Studying the creation of venture boards in a hand-collected sample of 296 VC investment rounds in 132 German high-tech ventures, we find that risk exposure and investor syndication are strong predictors of whether a formal board is created or not. Our setup allows to study the creation of the nascent board in a legal context where its existence is voluntary and at the same time imposes a strong cost on its members through personal liability. We find that the probability of board creation strongly increases with the amount invested and with conflicting interests among multiple investors. The need for a formalized corporate governance in form of a board is most amplified in seed rounds with three or more syndicating investors, in follow-on rounds with the entrance of any additional institutional investor, and in the presence of pre-planned exit. Hence, a venture board is most required when the stakes are high and when the divergence of interests among principals is amplified.

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Venture Governance: A New Horizon for Corporate Governance

Cited by 24 publications

References 72 publications

Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period

Dynamic Corporate Governance, Innovation, and Sustainability: Post-COVID Period

Founder teams and firm value in young public firms: An analysis of the moderating effect of founders' ownership power and team size

Kicking Off the Corporate Governance Lifecycle: Seed Funding, Venture Capital and the Nascent Board

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