Relationship between Venture Capital, Corporate Governance and Firm Value

Abstract

This chapter builds a theoretical framework for the relationship between venture capital, corporate governance and firm value on the basis of the two perspectives introduced in chapter three. The four aspects that are expected to have the greatest importance in this relationship, based on the literature review, are analysed. First, the reasons for the venture capitalists’ influence on the corporate governance of portfolio companies are explained. Thereafter, the expected effects of the influence on corporate governance quality are described. This is followed by a description of the abilities that should determine the venture capitalists’ impact. In the end, the effects of good corporate governance on growth companies′ firm value are determined.²⁹¹ The specific hypotheses are derived in the following.²⁹²

For a literature review on corporate governance in growth companies, refer to Daily et al. (2002), pp. 387ff.

An overview of all hypotheses is given in 5.1.