Can Venture Capital Curb Firms'Food and Drug Safety Violations?
This paper examines the role of venture capitalists(VCs)in curbing the incidence and severity of food and drug safety violations commit-ted by their portfolio firms.Our baseline results show that compared with non-VC-backed firms,VC-backed firms are less likely to commit food and drug safety violations and their violations are likely to negatively impact fewer consumers.Exploring the underlying mechanisms,we find that the impact of VCs on firms'food and drug safety violations is more pronounced when VCs hold directorships in their portfolio firms,have a higher reputation,and come from cities with higher levels of food and drug safety regulation,suggesting that VCs curb firms'food and drug safety violations by exercising supervisory func-tions.Finally,our cross-sectional tests suggest that the effect of VCs on food and drug safety violations is more significant for VCs without political connec-tions and corporate venture capital(CVC).Collectively,our study highlights the monitoring effect of VCs on firms'food and drug safety violations,and provides implications for food and drug regulatory departments to take advantage of financial intermediaries to improve food and drug safety,and thereby securing public health.
Venture CapitalFood and Drug SafetyCorporate MisconductCorporate Social Responsibility
万方数据
维普
