Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/43232
Authors: 
Bienz, Carsten
Walz, Uwe
Year of Publication: 
2008
Series/Report no.: 
CFS Working Paper 2009/05
Abstract: 
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.
Subjects: 
Venture Capital
Corporate Governance
Empirical Contract Theory
Hold-up
Exit Rights
Trade-sale Rights
JEL: 
G24
G34
D80
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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