Disciplining delegated monitors: When venture capitalists fail to prevent fraud by their IPO firms

• 成果类型: Article
• 署名作者: Tian, Xuan; Udell, Gregory F.; Yu, Xiaoyun
• 署名单位: Indiana University System; IU Kelley School of Business; Indiana University Bloomington; Tsinghua University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.09.004
• 发表日期: 2016
• 关键词: Reputation; syndication; LITIGATION; certification; Underwriters; earnings; creation; CHOICE

摘要

Information-based theories of financial intermediation focus on delegated monitoring. However, there is little evidence on how markets discipline intermediaries who fail at this function. We exploit the direct link between corporate fraud and monitoring failure and examine how a venture capital (VC) firm's reputation is affected when it fails to prevent fraud in its portfolio companies. We find that reputation-damaged VCs interact differently in the future with their limited partners, other VCs, and IPO underwriters because they are perceived as ineffective monitors. In addition, VCs that fail to prevent fraud experience greater difficulty in taking future portfolio companies public. (C) 2015 Elsevier B.V. All rights reserved.