The Impact of Investment Networks on Venture Capital Firm Performance: A Contingency Framework

Venture capital (VC) syndicates involve repeated transactions among partners and therefore possess network-like characteristics. Although networks provide access to important externalities, extant literature has not studied the effects of the focal firm’s resource needs on performance benefits arising from different network structures. We investigate the impact of two proxies for firm-level resources, namely maturity and status, on the relationship between network cohesion and VC performance. We find that mature and high-status VCs benefit less from network cohesion. We also show that maturity and status simultaneously determine the performance effects of network cohesion

Management control systems in innovation companies: A literature based framework

Past research has traditionally argued that management control systems (MCSs) may present a hindrance to the creativity of innovation companies. This theoretical paper surveys the literature to focus an investigation on the MCSs of innovation companies. Within the object of control paradigm the paper develops and presents a theoretical model of the impact of eleven external, organisational and innovation related contingency factors on the MCSs in companies that engage in innovation activities. We also suggest measures for further empirical research. By formulating hypotheses on 43 potential interactions the model predicts contradictory influences on two direct control categories, results and action control, but stresses the importance of two indirect categories, personnel and cultural control. More specifically, the high levels of technological complexity and innovation capability in this type of company are expected to be negatively associated with the application of results and action control, whereas personnel and cultural seem to be more appropriate. Furthermore, important sources of finance, venture capital and public funding, are both hypothesised to be positively associated with the application of results, action and personnel control; whereas only public funding is predicted to be positively related to the application of cultural control. The principal contribution of this paper lies in synthesising the literature to provide a model of the impact of a unique set of eleven contingency factors for innovation companies on a broad scope of controls. In addition, the contingency model, if empirically validated, would add value by inferring the particular forms of management control which would be beneficial in innovative company settings. © 2014 Springer-Verlag Berlin Heidelberg

East meets west: when the Islamic and Gregorian calendars coincide

Recent research has documented that at the time of religious celebrations in Muslim countries, such as Ramadan, there is a “festival” effect in share returns. In the Gregorian calendar, December is also a time of celebration and festivities which may be associated with patterns in the behaviour of security prices. Further, the first month of the year in the Islamic calendar, Muharram, is a time of sadness and mourning for some believers, and there may be an effect when the Islamic first month of the year overlaps with the first month of the Gregorian year - January. Over a 33-year cycle, each Islamic month falls in a Gregorian month for about 5–6 consecutive years; when this happens, an Islamic (Eastern) calendar effect may interact with a Gregorian (Western) calendar effect. The current paper addresses this issue by examining the behaviour of share returns and volatility for individual companies listed in Muslim countries’ stock exchanges when the two calendars coincide for: (i) religious festival effects; (ii) first-month-of-the-year effects; and (iii) the two most common effects reported in the Islamic and Gregorian calendars (Ramadan and January). The results show that the Western and Eastern effects interact more prominently in larger companies and in larger or more developed markets

Business performance and angels presence: A fresh look from France 2008–2011

Business angels enjoy a strong reputation for being more efficient than other investors among policy makers, practitioners, and scholars. However, due to the limited availability of specific financial data, previous research has barely assessed the impact of angels on companies’ performance. This paper seeks to bridge this gap by providing evidence from a unique dataset made up of 432 angel-backed French companies which are compared to two control groups, one randomly selected and another one consisting of similar enterprises. This double comparison process enables us to purge our analysis of structural effect and to demonstrate the importance of the methodology in generating the sample. Indeed, the results we obtain significantly differ depending on the control group. Our results show that the positive influence of angels depends on the condition of the comparison. The set of BA-backed companies is more likely to exhibit superior performance when it is compared to a random sample whereas the companies’ performance is either identical or worse when it is compared to a sample composed of k-nearest neighbors. In addition, using a quantile regression technique makes it possible to differentiate the effect of business angels based on the distribution of the value of the growth rate. © 2017, Springer Science+Business Media New York

Market Risk Disclosures and Board Gender Diversity in Gulf Cooperation Council (GCC) Firms

We investigate the impact of board gender diversity on corporate risk reporting for Gulf Cooperation Council (GCC) financial firms. Recent developments and improvements of corporate governance in the GCC markets suggest that firms in the GCC have become more transparent with less information asymmetry. However, we find that the presence of female directors in the boards of financial institutions suppresses the positive association between corporate governance and market risk disclosures for the period between 2007 and 2011. These findings suggest that culture and conservatism nature of GCC societies persist in the GCC business environment. Our results are robust to alternative specifications and endogeneity tests

Investment Committees and Corporate Cash Holdings

We investigate the association between the voluntary formation of a board investment committee (IC) and corporate cash holdings for a large sample of Gulf Cooperation Council (GCC) firms over the 2005–2013 period. We provide evidence that the existence of a specialized IC increases corporate cash holdings. We also find that several IC characteristics, i.e., member experience, independence, number of meetings, and committee size, are associated with an increase in firms’ cash holdings. Furthermore, the local and foreign institutional ownership of GCC firms moderates the IC-cash holdings relationship. These results remain robust to alternative specifications of cash holdings and endogeneity tests. We contribute to the literature on firms’ incentives to hold cash and to the literature on governance in emerging market contexts

In which regions do governmental, independent, and corporate venture capital firms invest? An empirical investigation across 402 German regions

We analyze the distribution of venture capital (VC) investments across German regions and explore the geographical determinants of these investments. So far, little is known about the regional determinants of governmental (GVC), independent (IVC), and corporate (CVC) VC firms and about whether these types of VC firms invest in different regions. Combining a dataset of 402 German districts, our regressions show that regions with a higher supply of human capital and knowledge creators attract a significantly higher number of GVC investments. Moreover, we find a significant difference in economically weaker regions but do not find a metropolitan bias. Hence, GVC firms do not invest more frequently in rural regions per se and do not prevent regional disparities more often than other types of VC firms. The implications of these findings for high-tech firms and regional policy are discussed