Venture capital exit rights

Theorists argue that exit rights can mitigate hold-up problems in venture capital. Using a hand-collected data-set of venture capital contracts from Germany we show that exit rights are included more frequently in ventur
Theorists argue that exit rights can mitigate hold-up problems in venture capital. Using a hand-collected data-set of venture capital contracts from Germany we show that exit rights are included more frequently in venture capital contracts when a hold-up problem associated with the venture capitalist's exit decision is likely. Examples include drag-along and tag-along rights. Additionally, we find that almost all exit rights are allocated to the venture capitalist rather than to the entrepreneur. In addition, we show that besides the basic hold-up mechanism there are other mechanisms such as ex-ante bargaining power and the degree of pledgeable income that drive the allocation of exit rights. JEL Classification: G24, G34, D80
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Metadaten
Author:Carsten Bienz, Uwe Walz
URN:urn:nbn:de:hebis:30-63764
Series (Serial Number):CFS working paper series (2009, 05)
Document Type:Working Paper
Language:English
Date of Publication (online):2009/04/16
Year of first Publication:2009
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2009/04/16
Tag:Corporate Governance ; Empirical Contract Theory ; Exit Rights ; Hold-up ; Trade-sale Rights; Venture Capital
HeBIS PPN:211775274
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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