Venture-Capitalist Directors and Managerial Incentives

Research has shown that venture capital (VC) firms substantially influence the overall economy. According to Gornall and Strebulaev (2021), among all U.S. public companies founded since 1968, VC-backed companies account for 77 percent of total market capitalization, 41 percent of total employees, and 92 percent of R&D spending. In addition, there is extensive literature discussing the role of VC firms at startup companies, where they do everything from providing advice and support to improving corporate governance to fostering corporate innovation. However, there is limited understanding about the role of VC at mature companies, especially VC’s impact on executive compensation.

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