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Employee Equity Incentives And Venture Capitalist Involvement: Examining The Effects On Ipo Performance

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Author Info

  • JAMES W. WESTERMAN

    ()
    (Appalachian State University, Walker College of Business Administration, ASU Box 32089, Boone, NC 28608-2089, USA)

  • SCOTT W. GEIGER

    (University of South Florida St. Petersburg, College of Business, 140 7th Ave South, St. Petersburg, FL 33701, USA)

  • LINDA A. CYR

    (Tapestry Networks, 45 Church St. #3, Boston, MA 02116, USA)

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    Abstract

    We examine the effects of venture capitalist involvement and equity incentives for all employees on the performance of initial public offering firms. Data was collected from 402 IPO firms, representing 242 non-VC backed and 160 VC backed firms. Results indicate venture capitalists positively influence the likelihood the portfolio firm will offer equity incentives to all employees. Consistent with the agency theory argument that monitoring and incentives can behave as complements to one another, the results suggest venture capitalist backing and incentive stock options for all employees operate in concert to have a positive effect on stock price performance three years after the initial public offering.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Journal of Developmental Entrepreneurship.

    Volume (Year): 13 (2008)
    Issue (Month): 04 ()
    Pages: 409-423

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    Handle: RePEc:wsi:jdexxx:v:13:y:2008:i:04:p:409-423

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    Related research

    Keywords: IPO; venture capital; employee incentives; agency theory; stock options;

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    Cited by:
    1. Rosenbusch, Nina & Brinckmann, Jan & Müller, Verena, 2013. "Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance," Journal of Business Venturing, Elsevier, vol. 28(3), pages 335-353.

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