In the boardroom: board structure after PIPE deals

Board structure after PIPE deals

Funded through a Faculty of Business and Economics research grant, this project examines the role that incumbent venture capitalists (VC) play in board composition after a private investment in public equity (PIPE) transaction.

Grant recipient Dr Ali Akyol will examine how a new board may be influenced by a VC given they are often likely to be associated with the PIPE investors.

This study is groundbreaking in that all previous studies in the area have examined the relationship between VCs and initial public offering (IPO) performance but have not considered the continued influence of VC directors after the IPO.

Dr Akyol will also investigate whether the new board structure affects firm value and the level of influence held by a chief executive if they choose investors and directors to whom they have a personal association.

Impact

Existing PIPE literature generally focuses on the motives of investors, the PIPE contractual terms, and their impact on announcement reactions or ongoing firm performance. However, this literature does not examine the determinants of PIPE investor/director identity and the implications of a new board composition for firm value.

This project seeks to fill that knowledge gap by improving the understanding of the role of incumbent VC directors in director selection in listed corporations.