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VC Backing Raises Governance Standards at IPOs

Global Glimpses | December 9, 2008

Companies that have venture capital (VC) funding before they make an Initial Public Offering of shares have better corporate governance than those without VC support, according to new research from Australia.

The boards of VC-backed companies joining the Australian Stock Exchange (ASE) had a higher percentage of independent directors, and those directors were deemed more independent than at other companies, the study found.

Venture capital funds were using their networks to find specialist independent directors to help run companies and, therefore, provide better corporate governance, said Professor Jo-Ann Suchard from the University’s School of Banking and Finance, who led the research.

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