Dang, V.A., Karpuz, A. and Mohamed, A. (2023) Venture Capital Directors and Corporate Debt Structure: An Empirical Analysis of Newly Listed Companies. Journal of Banking and Finance, 157. 107031. ISSN 0378-4266
Abstract
We investigate how venture capitalists (VCs) serving as directors on corporate boards affect portfolio companies’ debt structure after initial public offerings (IPOs). Using hand-collected data, we find that companies with a higher fraction of VC directors on their boards use significantly fewer types of debt. The impact of VC directorships on debt concentration is more pronounced in companies facing greater expected bankruptcy costs or higher degrees of uncertainty. We further explore the benefits of debt concentration and find that a highly concentrated debt structure is associated with better corporate performance in companies with VC directors. Taken together, our evidence suggests that VC directors influence newly listed companies to adopt a concentrated debt structure, thus minimizing the risk of distress and enhancing company value. Our results are robust to accounting for endogeneity and sample selection bias.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 Elsevier B.V. This is an author produced version of an article published in Journal of Banking & Finance. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Venture capital; Board of directors; Debt structure; IPO |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 26 Oct 2023 10:50 |
Last Modified: | 14 Nov 2023 15:46 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jbankfin.2023.107031 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:204611 |
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Filename: Manuscript With TitleJBF.pdf
Licence: CC-BY-NC-ND 4.0
