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http://ssrn.com/abstract=1364133
 
 

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Investor Opportunism and Governance in Venture Capital


Brian J. Broughman


Indiana University Maurer School of Law

March 8, 2009

Companion to Venture Capital, 2009

Abstract:     
There is a risk of ex post opportunism between entrepreneurs and investors in firms financed by venture capital (VC). Entrepreneurs and VC investors have different interests with respect to numerous decisions, such as whether to replace the CEO or obtain additional financing. VC investors, who often hold substantial control rights in startup firms, may use their position opportunistically - causing a startup firm to take actions that benefit the VCs at the expense of the firm as a whole. This book chapter summarizes the existing literature on VC opportunism in three settings: (i) CEO replacement, (ii) Later-round financing, and (iii) VC exit.

Number of Pages in PDF File: 25

Keywords: Opportunism, Venture Capital, Corporate Governance

JEL Classification: G24, G32, G33, G34, K12, K20, K22, M13

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Date posted: March 19, 2009  

Suggested Citation

Broughman, Brian J., Investor Opportunism and Governance in Venture Capital (March 8, 2009). Companion to Venture Capital, 2009 . Available at SSRN: http://ssrn.com/abstract=1364133

Contact Information

Brian J. Broughman (Contact Author)
Indiana University Maurer School of Law ( email )
211 S. Indiana Avenue
Bloomington, IN 47405
United States
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