Vulture capitalists or virtue capitalists? Examining the effects of venture capitalist involvement on the use of equity incentives and firm performance in initial public offering firms.

摘要

Although venture capitalists (VCs) are often maligned as vultures who 'steal' large portions of entrepreneurs' companies in exchange for much needed cash, a review of the venture capital literature reveals that VCs provide essential 'value added' to their portfolio firms. Among the most critical resources that VCs offer in addition to financing are acting as a sounding board for management, providing links to the financial community, and sharing their business acumen. Venture capitalists bring with them myriad experiences of success and failure, and the nature of their relationships with their portfolio companies positions them to share the lessons of those experiences. To date, investigations of this 'value added' have focused on the relationship between the venture capitalist and the top management team of the portfolio firm.;In this dissertation, I argue that venture capitalists might add value by influencing the portfolio firm's use of equity incentives for all employees. Specifically, I rely on the venture capital literature (e.g. Gorman & Sahlman, 1989; Sapienza, 1992), the finance literature related to the effects of venture capitalist involvement in initial public offering firms (e.g. Barry, Muscarella, Peavy, & Vetsuypens, 1990; Megginson & Weiss, 1991), and the agency-based compensation literature (e.g. Gomez-Mejia, 1994; Stiglitz, 1975) to develop hypotheses regarding the effects of venture capitalist involvement and the use of equity incentives for all employees on performance of initial public offering firms.;Analyses of data from a sample of 402 firms that went public in 1993 provide support for the hypothesis that venture capitalists positively influence the likelihood that the portfolio firm will offer equity incentives (i.e. incentive stock options and stock purchase plans) to all employees. Furthermore, consistent with the agency theory argument that monitoring and incentives can behave as complements to one another, venture capitalist involvement and equity incentives for all employees operate in concert to have a positive effect on stock price performance three years after the initial public offering.