Abstract
When a young entrepreneurial firm matures, it is often necessary to replace the founding entrepreneur by a professional manager. This replacement decision can be affected by the private benefits of control enjoyed by the entrepreneur which gives rise to a conflict of interest between the entrepreneur and the venture capitalist. We show that a combination of convertible securities and contingent control rights can be used to resolve this conflict efficiently. This contractual arrangement is frequently observed in venture capital finance.
Dokumententyp: | Paper |
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Keywords: | Corporate Finance, Venture Capital, Control Rights, Convertible Securities |
Fakultät: | Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A4 - Unvollständige Verträge, Marktinteraktion und soziale Vergleichsprozesse Volkswirtschaft Volkswirtschaft > Lehrstühle > Seminar für Wirtschaftstheorie |
Themengebiete: | 300 Sozialwissenschaften > 330 Wirtschaft |
JEL Classification: | D23, G24, G32 |
URN: | urn:nbn:de:bvb:19-epub-13449-7 |
Sprache: | Englisch |
Dokumenten ID: | 13449 |
Datum der Veröffentlichung auf Open Access LMU: | 10. Jul. 2012, 13:10 |
Letzte Änderungen: | 04. Nov. 2020, 12:53 |
Alle Versionen dieses Dokumentes
- Conditional Allocation of Control Rights in Venture Capital Finance. (deposited 10. Jul. 2012, 13:10) [momentan angezeigt]