We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses.
- Authors
KAPLAN, STEVEN N.; STRÖMBERG, PER
- 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 postinvestment actions. We classify the risks into three categories and relate them to the allocation of cash flow rights, contingencies, control rights, and liquidation rights between VCs and entrepreneurs. The risk results suggest that agency and hold-up problems are important to contract design and monitoring, but that risk sharing is not. Greater VC control is associated with increased management intervention, while greater VC equity incentives are associated with increased value-added support.
- Subjects
VENTURE capital companies; VENTURE capital; PORTFOLIO management (Investments); INVESTMENT analysis; INVESTORS; RISK sharing; ENTREPRENEURSHIP; RISK management in business; LIQUIDATION; BOARDS of directors; MANAGEMENT
- Publication
Journal of Finance (Wiley-Blackwell), 2004, Vol 59, Issue 5, p2177
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.2004.00696.x