How Do Legal Differences and Learning Affect Financial Contracts?

Steven Kaplan (), Frederic Martel and Per Stromberg

No 10097, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2003-11
New Economics Papers: this item is included in nep-cfn and nep-com
Note: CF
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Published as Kaplan, Steve N., Fredric Martel, and Per Strömberg. “How Do Legal Differences and Learning Affect Financial Contracts?” Journal of Financial Intermediation, 2007.

Downloads: (external link)
http://www.nber.org/papers/w10097.pdf (application/pdf)

Related works:
Working Paper: How Do Legal Differences and Learning Affect Financial Contracts? (2004)
Working Paper: How Do Legal Differences and Learning Affect Financial Contracts? (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10097

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10097

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().