type="main" xml:id="ecin12088-abs-0001" <title type="main">Abstract</title> Real-world financial contracts are sometimes so complex that it can be difficult to understand their exact payoff consequences. We develop and test a theoretical model of a venture capitalist (VC) negotiating with an entrepreneur who may overweigh...

type="main" <p>Real-world financial contracts vary greatly in the combinations of cash flow contingency terms and control rights used. Extant theoretical work explains such variation by arguing that each investor finely tailors contracts to mitigate investment-specific incentive problems. We...</p>

This paper shows that geographical and cultural elements could form an essential component of contract design in addition to more quot;traditionalquot; ingredients such as information and agency problems and the quality of legal institutions. Contracts between U.S. venture capitalists (VCs) and...

We study the compensation earned by CEOs in private venture-backed firms. We extend the traditional view of pay-for-performance by proposing that the economic characteristics of startups and venture capital markets interact in such a way that CEOs will be rewarded for successfully raising new...

Using a large, new database of contractual provisions governing the allocation of cash flow rights in venture capital (VC) financings, we investigate how contract design is related to VC abilities to monitor and provide value-added services to the entrepreneur. We find that more experienced VCs,...

I show that intermediaries can affect the design of financial contracts by reducing asymmetry in contracting parties' knowledge about complicated and interrelated contract contingencies. Across 908 contracts used in venture capital (VC) transactions, entrepreneurs counseled by attorneys with...

We show that geographical elements and regional culture can play an essential role in contract design in addition to the influence of more quot;traditionalquot; determinants such as information and agency problems or the nature of legal institutions. Across 1,800 financial contracts written...

Relationships are an important solution to information problems in finance. This study addresses relational financing for a class of investors who face particularly severe information problems-venture capitalists (VCs). Using a hand-collected dataset of 637 serial founders, I examine how often...

This paper studies how covenants are included in contracts between venture capitalists (VCs) and entrepreneurs. I show that VCs hold covenanted veto rights even though they are shareholders who have access to other powerful governance solutions. Unlike bank loans and bonds, venture capital (VC)...