Abstract

http://ssrn.com/abstract=557007
 
 

References (38)



 
 

Citations (60)



 


 



How Do Legal Differences and Learning Affect Financial Contracts?


Steven N. Kaplan


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Per Strömberg


Swedish House of Finance

Frederic Martel


UBS Global Asset Management; University of Lausanne IMD

June 16, 2004


Abstract:     
We analyze venture capital (VC) investments in twenty-three non-U.S. countries and compare them to U.S. VC investments. We describe how the contracts allocate cash flow, board, liquidation, and other control rights. In univariate analyses, contracts differ across legal regimes. 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. The results suggest that U.S.-style contracts are efficient across a wide range of legal regimes. The evolution of contracts is consistent with financial contracting theories and costly learning.

Number of Pages in PDF File: 43

Keywords: Venture Capital, financial contracting, law and finance, capital and ownership structure

JEL Classification: G24, G32

working papers series


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Date posted: June 21, 2004  

Suggested Citation

Kaplan, Steven N. and Strömberg, Per and Martel, Frederic, How Do Legal Differences and Learning Affect Financial Contracts? (June 16, 2004). Available at SSRN: http://ssrn.com/abstract=557007 or http://dx.doi.org/10.2139/ssrn.557007

Contact Information

Steven Neil Kaplan
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Per Stromberg (Contact Author)
Swedish House of Finance ( email )
Drottninggatan 98
111 60 Stockholm
Sweden

Frederic Martel
UBS Global Asset Management ( email )
Zurich, CH-8098
Switzerland
+41 1 235 56 93 (Phone)
+41 1 235 55 90 (Fax)
University of Lausanne IMD
Lausanne, 1015
Switzerland
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References:  38
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