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Center for Financial Studies (CFS), Universität Frankfurt a. M. >
CFS Working Paper Series, Universität Frankfurt a. M. >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/25477
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| Title: | | The dynamics of venture capital contracts  |
| Authors: | | Bienz, Carsten Hirsch, Julia |
| Issue Date: | | 2005 |
| Series/Report no.: | | CFS Working Paper 2006/11 |
| Abstract: | | We analyze the degree of contract completeness with respect to staging of venture capital investments using a hand-collected German data set of contract data from 464 rounds into 290 entrepreneurial firms. We distinguish three forms of staging (pure milestone financing, pure round financing and mixes). Thereby, contract completeness reduces when going from pure milestone financing via mixes to pure round financing. We show that the decision for a specific form of staging is determined by the expected distribution of bargaining power between the contracting parties when new funding becomes necessary and the predictability of the development process. To be more precise, parties choose the more complete contracts the lower the entrepreneurs expected bargaining power - the maximum level depending on the predictability of the development process. |
| Subjects: | | Venture Capital Corporate Governance Moral Hazard Renegotiation Contract Theory Empirical Contract Theory Contract Econometrics |
| JEL: | | G24 G32 D86 D80 G34 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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