Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211947 
Year of Publication: 
2003
Series/Report no.: 
Bank of Finland Discussion Papers No. 14/2003
Publisher: 
Bank of Finland, Helsinki
Abstract: 
According to empirical studies of venture capital finance, the division of control rights between entrepreneur and venture capitalists is often contingent on certain measures of firm performance.If the indicator of the company's performance (eg earnings before taxes and interest) is low, the venture capital firm obtains full control of the company.If company performance improves, the entrepreneur retains or obtains more control rights. If company performance is very good, the venture capitalist relinquishes most of his control rights.In this article, we extend the incomplete contracting model of Aghion and Bolton to construct a theoretical model that is consistent with these empirical findings.
Subjects: 
incomplete contracts
financial contracting
contingent contracts
control rights
joint ownership
JEL: 
G32
Persistent Identifier of the first edition: 
ISBN: 
952-462-061-8
Document Type: 
Working Paper

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