Venture capital meets contract theory: Risky claims or formal control?

Review of Finance

Volumn 18, Issue 3, 2014, Pages 1097-1137

  Cestone, Giacinta ^a  

^a CITY UNIVERSITY   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84901633526     PISSN: 15723097     EISSN: 1573692X     Source Type: Journal    
DOI: 10.1093/rof/rft021     Document Type: Article

References (48)

1. Aghion, P., Bolton, P., and Tirole, J. (2004) Exit options in corporate finance: Liquidity versus incentives, Review of Finance 8, 327-353. (Pubitemid 41201454
2. Aghion, P. and Tirole, J. (1997) Real and formal authority in organizations, Journal of Political Economy 105, 1-29.
3. AssetAlternatives Inc. (2000) The Corporate Venturing Directory & Yearbook, Asset-Alternatives Inc., Wellesley, Massachusetts.
4. Berglöf, E. (1994) A control theory of venture capital finance, Journal of Law, Economics and Organization 10, 247-267.
5. British Venture Capital Association (1998) A Guide to Venture Capital (available at: Http://www.bvca.co.uk).
6. Biais, B. and Casamatta, C. (1999) Optimal leverage and aggregate investment, Journal of Finance 54, 1291-1323.
7. Burkart, M., Gromb, D., and Panunzi, F. (1997) Large shareholders, monitoring, and the value of the firm, Quarterly Journal of Economics 112, 693-728. (Pubitemid 127110156
8. Casamatta, C. (2003) Financing and advising: Optimal financial contracts with venture capitalists, Journal of Finance 58, 2059-2086.
9. Cestone, G. and White, L. (2003) Anti-competitive financial contracting: The design of financial claims, Journal of Finance 58, 2109-2142.
10. Chan, Y., Siegel, D., and Thakor, A. (1990) Learning, corporate control, and performance requirements in venture capital contracts, International Economic Review 31, 365-381.
11. Cornelli, F. and Yosha, O. (2003) Stage financing and the role of convertible debt, Review of Economic Studies 70, 1-32. (Pubitemid 36101503
12. Cumming, D. J. (2008) Contracts and exits in venture capital finance, Review of Financial Studies 21, 1947-1982.
13. Cumming, D. J. and Johan, S. A. (2007) Advice and monitoring in venture finance, Financial Markets and Portfolio Management 21, 3-43.
14. Cumming, D. J. and Johan, S. A. (2009) Venture Capital and Private Equity Contracting: An International Perspective, Elsevier Science Academic Press, Amsterdam.
15. Dessein, W. (2002) Authority and communication in organizations, Review of Economic Studies 69, 811-838. (Pubitemid 35259305
16. Dessi, R. (2005) Start-up finance, monitoring, and collusion, RAND Journal of Economics 36, 255-274. (Pubitemid 41730803
17. Dewatripont, M. and Tirole, J. (1994) A theory of debt and equity: Diversity of securities and manager-shareholder congruence, Quarterly Journal of Economics 109, 1027-1054.
18. Diamond, D. (1984) Financial intermediation and delegated monitoring, Review of Economic Studies 51, 393-414.
19. Gale, D. and Hellwig, M. (1985) Incentive-compatible debt contracts, Review of Economic Studies 52, 647-663.
20. Gompers, P. (1999) Ownership and control in entrepreneurial firms: An examination of convertible securities in venture capital investments. Unpublished working paper, Harvard Business School.
21. Gompers, P. and Lerner, J. (1999) The Venture Capital Cycle, The MIT Press, Cambridge, Massachussets.
22. Gorman, M. and Sahlman, W. (1989) What Do Venture Capitalists Dö, Journal of Business Venturing 4, 231-248.
23. Green, R. (1984) Investment incentives, debt, and warrants, Journal of Financial Economics 13, 115-136.
24. Hamermesh, R. G., Laufer, R., and Lane, D. (2007) Corporate venture capital at Eli Lilly (Case Study), Harvard Business Publishing, Boston, Massachussets.
25. Hart, O. (1995) Firms, Contracts and Financial Structure, Oxford University Press, Oxford.
26. Hellmann, T. (1998) The allocation of control rights in venture capital contracts, Rand Journal of Economics 29, 57-76.
27. Hellmann, T. (2002) A theory of strategic venture investing, Journal of Financial Economics 64, 285-314.
28. Hellmann, T. (2006) IPOs, acquisitions and the use of convertible securities in venture capital, Journal of Financial Economics 81, 649-679. (Pubitemid 44089266
29. Hellmann, T. and Puri, M. (2002) Venture capital and the professionalization of start-ups: Empirical evidence, Journal of Finance 57, 169-197. (Pubitemid 36931760
30. Holmström, B. and Tirole, J. (1997) Financial intermediation, loanable funds and the real sector, Quarterly Journal of Economics 112, 663-691. (Pubitemid 28095148
31. Inderst, R. and Mu?ller, H. (2004) The effect of capital market characteristics on the value of start-up firms, Journal of Financial Economics 72, 319-356. (Pubitemid 38461975
32. Kalai, A. and Zender, J. F. (1997) Bankruptcy, warrants, and state-contingent changes in the ownership of control, Journal of Financial Intermediation 6, 347-379. (Pubitemid 127344768
33. Kaplan, S. and Strömberg, P. (2003) Financial contracting theory meets the real world: An empirical analysis of venture capital contracts, Review of Economic Studies 70, 281-315. (Pubitemid 36647258
34. Kaplan, S. and Strömberg, P. (2004) Characteristics, contracts, and actions: Evidence from venture capital analyses, Journal of Finance 59, 2177-2210. (Pubitemid 39392612
35. Kirilenko, A. A. (2001) Valuation and control in venture finance, Journal of Finance 56, 565-587. (Pubitemid 33592073
36. Lerner, J. and Merges, R. P. (1998) The control of technology alliances: An empirical analysis of the biotechnology industry, Journal of Industrial Economics 46, 125-156.
37. Pagano, M. and Röell, A. (1998) The choice of stock ownership structure: Agency costs, monitoring, and the decision to go public, Quarterly Journal of Economics 113, 187-225.
38. Renucci, A. (2006) Optimal claims and tightness of relationships with a value-enhancing investor. Unpublished working paper, GREMAQ, Universite de Toulouse.
39. Repullo, R. and Suarez, J. (2004) Venture capital finance: A security design approach, Review of Finance 8, 75-108. (Pubitemid 40965567
40. Sahlman, W. (1990) The structure and governance of venture capital organizations, Journal of Financial Economics 27, 473-522.
41. Sapienza, H. (1992) When do venture capitalists add value?, Journal of Business Venturing 7, 9-27.
42. Schindele, I. (2004) Advice and monitoring: Venture financing with multiple tasks. Unpublished working paper, Norwegian School of Management.
43. Schmidt, K. M. (2003) Convertible securities and venture capital finance, Journal of Finance 58, 1139-1166.
44. Silver, A. D. (1984) Who's Who in Venture Capital, Wiley and Sons, New York.
45. Tirole, J. (2000) Corporate governance, Econometrica 69, 1-35. (Pubitemid 33635738
46. Tirole, J. (2006) The Theory of Corporate Finance, Princeton University Press, Princeton, New Jersey.
47. Townsend, R. (1979) Optimal contracts and competitive markets with costly state verification, Journal of Economic Theory 21, 417-425.
48. Ueda, M. (2004) Banks versus venture capital: Project evaluation, screening and expropriation, Journal of Finance 59, 601-621. (Pubitemid 38483890