The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China
Taking Chinese startups backed by venture capital (VC) in 1997–2017 as the sample, this study investigates the impact of VC background on chief executive officer (CEO) replacement in portfolio companies. The results show that (1) compared to foreign VC, domestic VC is more likely to replace the CEO...
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| Format: | Article |
| Language: | English |
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Wiley
2021-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2021/4025499 |
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| _version_ | 1832551968727367680 |
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| author | Haixia Hao Lihong Guo |
| author_facet | Haixia Hao Lihong Guo |
| author_sort | Haixia Hao |
| collection | DOAJ |
| description | Taking Chinese startups backed by venture capital (VC) in 1997–2017 as the sample, this study investigates the impact of VC background on chief executive officer (CEO) replacement in portfolio companies. The results show that (1) compared to foreign VC, domestic VC is more likely to replace the CEO of the portfolio companies. (2) Syndicate with domestic VC can overcome the disadvantage of foreign VC geographically distant from the portfolio companies, and domestic VC as coinvestors can effectively monitor portfolio companies, increasing the possibility of CEO replacement. Heterogeneity analysis shows that the positive effect of VC background on CEO replacement exists in the subgroup of VC geographically proximate to the portfolio companies, indicating that geographic proximity to the portfolio companies helps VC more easily grasp the development of the portfolio companies and more likely to replace CEO. This paper reveals the differences in the behavior of VC in replacing CEO during the postinvestment management process, highlights the critical role of geographical proximity, and provides important management insights for VC and entrepreneurs. |
| format | Article |
| id | doaj-art-a1914d6ac94c423eb9ebe102317f18f0 |
| institution | Kabale University |
| issn | 1607-887X |
| language | English |
| publishDate | 2021-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Discrete Dynamics in Nature and Society |
| spelling | doaj-art-a1914d6ac94c423eb9ebe102317f18f02025-02-03T05:59:58ZengWileyDiscrete Dynamics in Nature and Society1607-887X2021-01-01202110.1155/2021/4025499The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from ChinaHaixia Hao0Lihong Guo1School of Economics and ManagementSchool of Economics and ManagementTaking Chinese startups backed by venture capital (VC) in 1997–2017 as the sample, this study investigates the impact of VC background on chief executive officer (CEO) replacement in portfolio companies. The results show that (1) compared to foreign VC, domestic VC is more likely to replace the CEO of the portfolio companies. (2) Syndicate with domestic VC can overcome the disadvantage of foreign VC geographically distant from the portfolio companies, and domestic VC as coinvestors can effectively monitor portfolio companies, increasing the possibility of CEO replacement. Heterogeneity analysis shows that the positive effect of VC background on CEO replacement exists in the subgroup of VC geographically proximate to the portfolio companies, indicating that geographic proximity to the portfolio companies helps VC more easily grasp the development of the portfolio companies and more likely to replace CEO. This paper reveals the differences in the behavior of VC in replacing CEO during the postinvestment management process, highlights the critical role of geographical proximity, and provides important management insights for VC and entrepreneurs.http://dx.doi.org/10.1155/2021/4025499 |
| spellingShingle | Haixia Hao Lihong Guo The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China Discrete Dynamics in Nature and Society |
| title | The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China |
| title_full | The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China |
| title_fullStr | The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China |
| title_full_unstemmed | The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China |
| title_short | The Impact of Venture Capital Background on CEO Replacement in Portfolio Companies: Empirical Evidence from China |
| title_sort | impact of venture capital background on ceo replacement in portfolio companies empirical evidence from china |
| url | http://dx.doi.org/10.1155/2021/4025499 |
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