Venture capital, corporate governance, and financial stability of IPO firms

Woody M. Liao, Chia Chi Lu, Hsuan Wang

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

This study investigates the effects of venture capital investments on corporate governance and financial stability of IPO-firms in the emerging markets. We find that VC-backed firms have less agency problems related to excess control than non-VC-backed firms at the time of IPO, and venture capitalists are more likely to improve the excess control problem in firms with weak-governance-structure than those with strong-governance-structure. We also find that VC-backed firms are less likely to encounter financial difficulty than non-VC-backed firms. Taken together, VC investments play a role in mitigating excess control and providing positive financial stability in the emerging markets.

Original languageEnglish
Pages (from-to)19-33
Number of pages15
JournalEmerging Markets Review
Volume18
DOIs
StatePublished - Mar 2014

Keywords

  • Corporate governance
  • Excess control
  • Financial stability
  • Initial public offerings
  • Venture capital investments

Fingerprint

Dive into the research topics of 'Venture capital, corporate governance, and financial stability of IPO firms'. Together they form a unique fingerprint.

Cite this