Voted Off: Corporate Governance and Internet Survivors

research assistance for this project. We explore whether corporate governance (CG) characteristics including independent boards, high levels of monitoring incentives, and CEO pay-performance sensitivity are related to the probability that Internet firms survived the capital market shakeout that occurred in the spring of the year 2000. Using a sample of 277 Internet firms that conducted IPOs from 1996—1999, we find that CG mechanisms are related to two possible outcomes: acquisition at a premium and outright failure. Furthermore, the results are stronger when the relationship is examined within a single SIC code. We conclude that a homogeneous sample helps to reveal how CG mechanisms protect shareholder investments. We also detect relationships between survivorship and traditional measures of financial condition, suggesting that Internet firms are subject to traditional economic determinants