Law plays a key role in determining the level of entrepreneurial action in society. Legal rules seek to define property rights, facilitate private ordering, and impose liability for legal wrongs, thereby attempting to establish conditions under which individuals may act. These rules also channel...

Black & Gilson (1998) argued that an IPO-welcoming stock market stimulates venture deals by enabling VCs to give founders a valuable “call option on control”. We study 18,000 startups to investigate the value of this option. Among firms that IPO, 60% of founders are no longer CEO. With...