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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/10419/43232
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| Title: | | Venture capital exit rights  |
| Authors: | | Bienz, Carsten Walz, Uwe |
| Issue Date: | | 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 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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