Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses

Steven Kaplan () and Per Stromberg

No 14, SIFR Research Report Series from Institute for Financial Research

Abstract: We study the investment analyses of 67 portfolio investments by 11 venture capital (VC) firms. VCs describe the strengths and risks of the investments as well as expected post-investment monitoring. We classify the risks into three categories and relate them to VC cash flow rights, control rights, liquidation rights, contingencies, and monitoring. The internal risk results suggest that agency problems are important to contract design and monitoring. The external risk results are inconsistent with risk sharing, but, instead, consistent with certain types of monitoring and screening. Expected VC monitoring and support are related to the contracts.

Keywords: Investment banking; Venture capital; Brokerage; Financing policy; Capital and ownership structure (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2003-06-15
New Economics Papers: this item is included in nep-cfn and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses (2002)
Working Paper: Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sifrwp:0014

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