Arbeitspapier
Conditional Allocation of Control Rights in Venture Capital Finance
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.
- Language
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Englisch
- Bibliographic citation
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Series: Munich Discussion Paper ; No. 2006-13
- Classification
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Wirtschaft
Organizational Behavior; Transaction Costs; Property Rights
Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- Subject
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Corporate Finance
Venture Capital
Control Rights
Convertible Securities
- Event
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Geistige Schöpfung
- (who)
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Gebhardt, Georg
Schmidt, Klaus M.
- Event
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Veröffentlichung
- (who)
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Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
- (where)
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München
- (when)
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2006
- DOI
-
doi:10.5282/ubm/epub.909
- Handle
- URN
-
urn:nbn:de:bvb:19-epub-909-1
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Gebhardt, Georg
- Schmidt, Klaus M.
- Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
Time of origin
- 2006