Abstract
We test the impact of differential levels of capital injection and different regions of incorporation on the governance structure of portfolio companies.Using a unique hand-collected questionnaire-based dataset from 164 companies in 5 countries (US, UK, France, Germany, Spain and Sweden) we shed light on previously unexplored governance decisions. Our empirical results show that there is a strong and positive relationship between VCs’ funding and their influence on some factors like decisions on CEO hiring, executive compensation, board decisions and appointments. Employee incentives are also positively related to the proportion of VC funding. On the other hand, results show that the proportion of VC funding is only limitedly significant in explaining VC influence on strategy direction and investment planning. Our analysis though, offers strong evidence of remarkable regional differences between Europe and the US.
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