Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses

Steven Kaplan () and Strömberg, Per
Authors registered in the RePEc Author Service: Per Stromberg

No 3243, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the investment analyses of 67 portfolio investments by 11 venture capital (VC) firms. VCs consider the attractiveness and risks of the business, management, and deal terms as well as expected post-investment monitoring. We then consider the relation of the analyses to the contractual terms. Greater internal and external risks are associated with more VC cash flow rights, VC control rights; greater internal risk, also with more contingencies for the entrepreneur; and greater complexity, with less contingent compensation. Finally, expected VC monitoring and support are related to the contracts. We interpret these results in relation to financial contracting theories.

Keywords: Investment banking; Venture capital; Financing policy; Capital and ownership structure; Brokerage (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Working Paper: Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses (2003)
Working Paper: Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses (2002)
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