Working Paper: NBER ID: w10097
Authors: Steven Kaplan; Frederic Martel; Per Stromberg
Abstract: We analyze venture capital (VC) investments in twenty-three non-U.S. countries and compare them to VC investments in the U.S. We describe how the contracts allocate cash flow, board, liquidation, and other control rights. In univariate analyses, contracts differ across legal regimes. At the same time, however, more experienced VCs implement U.S.-style contracts regardless of legal regime. In most specifications, legal regime becomes insignificant controlling for VC sophistication. VCs who use U.S.-style contracts fail significantly less often. Financial contracting theories in the presence of fixed costs of learning, therefore, appear to explain contracts along a wide range of legal regimes.
Keywords: No keywords provided
JEL Codes: G24; G32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Legal regime (K20) | Type of financial contracts (G19) |
| VC experience (G24) | Type of financial contracts (G19) |
| Type of financial contracts (G19) | VC survival (G24) |
| VC experience (G24) | VC survival (G24) |
| Legal regime (K20) | VC survival (G24) |