Wan Wongsunwai
DBA in Accounting & Management
Dissertation Chair: Profs. P. Healy and
K. Palepu
Does Venture Capitalist Quality Affect Corporate Governance?
This dissertation investigates the effect of venture capitalist (VC) quality on the corporate governance of portfolio companies, focusing on board characteristics and financial reporting quality. I develop a new metric to measure VC quality, using data that are obtainable for virtually all VC firms. This metric is highly correlated with VC funds' financial returns, and with the likelihood of successful exits through initial public offerings or trade sales. Companies backed by higher quality VCs have larger, more independent boards of directors, and have increased VC presence on the board, even after controlling for endogeneity. After going public, companies backed by higher quality VCs have lower abnormal accruals and a lower likelihood of financial restatement. Overall, the results suggest that higher quality VCs help establish better governance at companies in which they invest.
