Leveraged Employee Stock Ownership Plan (quot;ESOPquot;) transactions originated in the 1950s, yet there are still unresolved valuation issues that arise from a complex set of operating expenses, financing structures and contingent claims that are unique to leveraged ESOPs. Although complex,...

There has been a recent wave of PE firms that have gone public like Blackstone, Fortress, Apollo etc. Moreover, some firms like The Carlyle Group went through the private placement route by selling their shares to sovereign funds (personal wealth) of the people in the Middle East. Using a...

This paper seeks to explain the widespread use of independent directors in the governance of VC-backed firms, and in particular their use as quot;tie-breakersquot; on the boards of these firms. Allocating a tie-breaking vote to an unbiased quot;arbiterquot; commits the entrepreneur and VCs to...

We extend our prior work on how both supply (including the emergence of OTC equity derivatives and growth in share lending) and demand (including the growth of hedge funds) factors now facilitate the large-scale, low-cost decoupling of shareholder voting rights from shareholder economic...

The widely studied phenomenon of underpricing of new issues of common stock can be explained by underwriters' payoff asymmetry. Under uncertain investors' demand for a new issue, the underwriter's downside risk if he overestimates demand can be significantly larger than the upside potential when...

This paper considers the structure, governance and performance of a unique class of mutual funds that receives capital only from individuals, and reinvests this contributed capital in private companies, as opposed to traditional mutual funds that invest in publicly traded companies. We consider...

This paper has two main components: methodological and substantive. Methodologically, it develops a new way of measuring and coding contractual, statutory, and regulatory variables through series of Monte-Carlo simulations. Substantively, it tests whether the extent to which a firm locks in its...

In this paper, we examine a Canadian tax-driven vehicle known as the Labour Sponsored Venture Capital Corporation (LSVCC). As a theoretical matter, we suggest that the LSVCCs can be expected to have higher agency costs and lower profitability than private venture capital funds. We present data...

This paper considers the issue of when venture capitalists (VCs) make a partial, as opposed to a full exit, for the full range of exit vehicles. A full exit for an IPO involves a sale of all of the venture capitalist's holdings within one year of the IPO; a partial exit involves sale of only...

Venture capital exit vehicles enable, to different degrees, mitigation of informational asymmetries and agency costs between the entrepreneurial venture and the new owners of the firm. Different exit vehicles also affect the amount of new capital for the entrepreneurial firm. Based on these...