Performance hurdles in venture capital fund compensation

IF 9.8 1区经济学 Q1 BUSINESS, FINANCE International Review of Financial Analysis Pub Date : 2025-02-27 DOI:10.1016/j.irfa.2025.104015

Jianwei Dong , Yuan-Teng Hsu , Guoping Shi , Siyuan Tan

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Abstract

The existing research provides limited insights into the compensation incentives of limited partnerships, particularly regarding performance hurdles. This study investigates how performance hurdles affect the appointment of venture capital (VC) directors to portfolio company boards. Utilizing mandatory disclosure data from Chinese listed companies acting as limited partners in VC funds, we construct a unique dataset of managerial incentive schemes covering 104 VC funds. Our findings reveal that higher performance hurdles significantly increase the likelihood of VC firms appointing directors to portfolio companies. This effect is more pronounced when VC funds invest in geographically proximate portfolio companies and when the company's CEO concurrently serves as a board chair (CEO duality). Moreover, by appointing VC directors, higher performance hurdles foster innovation and enhance the likelihood of successful initial public offerings for portfolio companies. These results highlight the pivotal role of performance hurdles in driving portfolio company growth by incentivizing greater engagement from VC fund managers.

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风险投资基金薪酬的绩效障碍

现有的研究对有限合伙企业的薪酬激励机制，特别是在业绩障碍方面提供了有限的见解。本研究探讨绩效障碍如何影响风险投资（VC）董事在投资组合公司董事会的任命。利用中国上市公司作为风险投资基金有限合伙人的强制性披露数据，我们构建了一个独特的涵盖104家风险投资基金的管理层激励方案数据集。我们的研究结果表明，更高的绩效障碍显著增加了风投公司为投资组合公司任命董事的可能性。当风投基金投资于地理位置接近的投资组合公司，以及该公司的首席执行官同时担任董事会主席（首席执行官双重性）时，这种影响更为明显。此外，通过任命风投董事，更高的绩效障碍会促进创新，并提高投资组合公司成功进行首次公开发行（ipo）的可能性。这些结果突出了绩效障碍在推动投资组合公司增长方面的关键作用，因为它能激励风险投资基金经理更多地参与其中。

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来源期刊

International Review of Financial Analysis BUSINESS, FINANCE-

CiteScore

10.30

自引率

9.80%

发文量

366

期刊介绍： The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.