Abstract
Recent growth in the VC industry has given way to new academic research exploring mainly the form and the function of VCs. While we now know much more on the mechanics of this industry still we have limited knowledge on the effect of VC activity in shaping and managing the governance structure of portfolio companies conditional and unconditional on the size of the investment injected and on the geographical area of the portfolio company., In this paper, we try to fill this gap by testing the impact of differential levels of capital injection and different regions of incorporation of portfolio companies on a unique hand-collected questionnaire-based dataset from 164 companies in 5 countries (US, UK, France, Germany, Spain and Sweden). By using survey data we have been able to explore governance decisions at a deeper level of analysis than allowed by data available through traditional providers. Our results show that VCs influence on CEO hiring, executive compensation, employee incentives, board decisions, and board appointments grows with the increase of VCs’ capital injection.. Differently from Hellmann and Puri (2002), the size of VC funding is not significant in shaping human resource practices, strategic planning and investment policies. Results are significantly affected by the geographical region: European investors are particularly influential on a reduced set of governance issues with industry of the portfolio company - more than investment size - being a driving factor. On the other hand the larger the size of the investment and the higher the influence of US investors on a much larger set of governance items.