Abstract
This paper investigates the impact of venture capital on managers’ compensation contracts. The results show that pay-performance sensitivity (PPS) is higher in venture-capital-backed companies than in non-venture-capital-backed companies. A higher PPS may bring managers of venture-capital-backed companies a higher extra emolument compared with that offered by other companies in the same industry. A further test shows that the positive effect of venture capital on PPS and extra emolument exists in (1) private enterprises rather than state-owned enterprises (SOEs) and (2) in firms backed by highly reputable venture capitalists (VCs) rather than in firms backed by VCs with a low reputation. The findings indicate that even after initial public offerings (IPOs), venture capital still has a positive impact on corporate governance and affects managerial compensation contracts.
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F276.6, F275, F830.5
This research is funded by a National Natural Science Grant (Grant No: 71l72l43), a Key Socia1 Science Research Institute Grant of the Ministry of Education (Grant No.: 12JJD790037), and the Program for New Century Excellent Talents in University (NCET-13-0893).
Shuang Xue, School of Accountancy, Institute of Accounting and Finance, Shanghai University of Finance and Economics. Posta1 Code: 200433. Email: xuesh@mail.shufe.edu.cn. Fengshou Tang,Schoo1 of Accountancy, Shanghai University of Finance and Economics; Zhejiang Wanli University.Email:tang_fsh@163.com.
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Xue, S., Tang, F. Venture Capital, Property Rights, and Managerial Compensation Contracts1. China Account Financ Rev 15, 2 (2013). https://doi.org/10.7603/s40570-013-0010-y
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DOI: https://doi.org/10.7603/s40570-013-0010-y