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 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
| Author: | Carsten Bienz, Uwe WalzORCiDGND |
|---|---|
| URN: | urn:nbn:de:hebis:30-63764 |
| Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2009,05 |
| Series (Serial Number): | CFS working paper series (2009, 05) |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2009 |
| Year of first Publication: | 2009 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2009/04/16 |
| Tag: | Corporate Governance; Empirical Contract Theory; Exit Rights; Hold-up; Trade-sale Rights; Venture Capital |
| GND Keyword: | Deutschland; Risikokapital; Vertrag |
| HeBIS-PPN: | 211775274 |
| Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
