Venture Capital- Backed Investment : Impack on Corporate Governance in Sweden

University essay from Blekinge Tekniska Högskola/Sektionen för management

Abstract:

Title: VENTURE CAPITAL-BACKED INVESTMENT: IMPACT ON CORPORATE GOVERNANCE IN SWEDEN Author: John Gartchie Gatsi Supervisor: Anders Hederstierna Department: School of Management, Blekinge Institute of Technology Course: Master’s Thesis in Business Administration, 10 Credits Background and problem discussion: Sweden is one of the small open economies with flourishing venture capital investments. Much research has not been conducted into corporate governance in Sweden when venture capital is involved. I therefore studied how venture capital investments affect corporate governance and performance in Sweden. The research question focuses on board chairperson’s separation from the CEO, independent audit and compensation committees and other board members. Purpose: The study was conducted to understand how corporate governance has developed into the management of Venture Capital backed investments in Sweden since, Sweden ranked third to Venture Capital investment destination currently. The result will add to the limited existing literature on the subject in Sweden with venture capital as the focus. Theory: The study was conducted using both complementarities framework and governed corporation principle in which venture capital firms and their portfolio firms in Sweden benefit from each other. Analysis: Data for the thesis was collected from selected Venture Capitalists who are members of the Swedish Venture Capital Association through simple Open and closed ended self administered questionnaire. Conclusion: Venture capitalists ensure active participation in the portfolio firms through board representation but do not consider appointment of board chair as a means to enhance corporate governance. Separation of the board chair from the CEO of a portfolio firm is a clear characteristic of corporate governance in venture capital backed investments in Sweden. More importance is placed on collective decision making than Audit and Compensation Committees.

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