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Venture capitalists' governance of their portfolio companies
Linköping University, Department of Management and Engineering, Business Administration. Linköping University, Faculty of Arts and Sciences.
Linköping University, Department of Management and Engineering, Project management, Innovations and Entrepreneurship . Linköping University, The Institute of Technology.ORCID iD: 0000-0002-5960-9270
2001 (English)In: Journal of Enterprising Culture, ISSN 0218-4958, Vol. 9, no 2, 201-219 p.Article in journal (Refereed) Published
Abstract [en]

Several sources have emphasized the importance of the entrepreneurial economy, and the role venture capitalists (VCs) plays as financiers. VCs are often actively and personally involved in their portfolio companies, but the cost of governance is high and they therefore have to select when to be active participants. Four different risks are identified in this paper: agency risk, business and market risk, coalition risk, and conformity risk. Weak support is found for the categories of agency and business and market risk. The data speak in favor of VCs getting more involved when the portfolio companies experience some kind of trouble. Their activity level increases when the portfolio companies have an inexperienced CEO, when the companies are in an early stage of their development, are young, have a weak board of directors, and/or a weak performance.

Place, publisher, year, edition, pages
World Scientific Publishing , 2001. Vol. 9, no 2, 201-219 p.
Keyword [en]
Venture capital, governance, portfolios
National Category
Social Sciences
URN: urn:nbn:se:liu:diva-80167DOI: 10.1142/S0218495801000110OAI: diva2:546000
Magnus Klofsten
Available from: 2012-08-22 Created: 2012-08-22 Last updated: 2016-05-04

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Fredriksen, ÖysteinKlofsten, Magnus
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Business AdministrationFaculty of Arts and SciencesProject management, Innovations and Entrepreneurship The Institute of Technology
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