Contracts and Exits in Venture Capital Finance

Posted: 19 Sep 2008

Multiple version iconThere are 2 versions of this paper

Date Written: September 2008


Using a sample of European venture capital (VC) investments, I study the relation between VC contracts and exits. The data indicate that ex ante, stronger VC control rights increase the likelihood that an entrepreneurial firm will exit by an acquisition, rather than through a write-off or an IPO. My findings are robust to controls for a variety of factors, including endogeneity and cases in which the VC preplans the exit at the time of contract choice. My findings are consistent with control-based theories of financial contracting, such as Aghion and Bolton ().

Keywords: G24, G32, G33, G34

Suggested Citation

Cumming, Douglas J., Contracts and Exits in Venture Capital Finance (September 2008). The Review of Financial Studies, Vol. 21, Issue 5, pp. 1947-1982, 2008, Available at SSRN: or

Douglas J. Cumming (Contact Author)

Florida Atlantic University ( email )

777 Glades Rd
Boca Raton, FL 33431
United States


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