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Venture Capital Exits in Canada and the United States

Douglas Cumming
York University - Schulich School of Business

Jeffrey G. MacIntosh
University of Toronto - Faculty of Law

University of Toronto Law Journal, Vol. 53, pp. 101-200, 2003

Abstract:
Venture capital exit vehicles enable, to different degrees, mitigation of informational asymmetries and agency costs between the entrepreneurial venture and the new owners of the firm. Different exit vehicles also affect the amount of new capital for the entrepreneurial firm. Based on these factors, we conjecture the efficient pattern of exits depending on the quality of the entrepreneurial venture, the nature of its assets, and the duration of venture capital investment. We empirically assess the significance of these factors using a multinomial logit model. Our comparative results between Canada and the U.S. provide insight into the impact of different institutional and legal constraints, and suggest such constraints have distorted the efficient pattern of exits in Canada.

JEL Classifications: G24, G28, G32, G38, K22

Accepted Paper Series

Date posted: October 24, 2002 ; Last revised: February 03, 2006

Suggested Citation

MacIntosh, Jeffrey G. and Cumming, Douglas J., Venture Capital Exits in Canada and the United States. University of Toronto Law Journal, Vol. 53, pp. 101-200, 2003. Available at SSRN: http://ssrn.com/abstract=321641 or doi:10.2139/ssrn.321641

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Contact Information

Douglas J. Cumming (Contact Author) York University - Schulich School of Business ( email ) 4700 Keele Street Toronto, Ontario M3J 1P3 Canada HOME PAGE: http://www.venturecapitalprivateequitycontracting.com/
Jeffrey G. Macintosh University of Toronto - Faculty of Law ( email ) 78 and 84 Queen's Park Toronto, Ontario M5S 2C5 Canada 416-978-5795 (Phone) 416-978-2648 (Fax)