Empirical Analysis of Contracts in Venture Financing

2004 Fiscal Year Final Research Report Summary

• Project/Area Number: 15530230
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Single-year Grants
• Section: 一般
• Research Field: Public finance/Monetary economics
• Research Institution: Otemon Gakuin University
• Principal Investigator: YOTSUZUKA Thmoko Otemon Gakuin University, Faculty of Economics, Associate Professor, 経済学部経済学科, 助教授 (20243149)
• Co-Investigator(Kenkyū-buntansha): KIKUTANI Thtsuya University of Kyoto, Graduate School of Economics, Associate Professor, 大学院・経済学研究科, 助教授 (80183789)
• Project Period (FY): 2003 – 2004
• Keywords: moral hazard / contract theory / cash-flow rights / Control rights / class-voting stock / staged financing / strategic ambiguity

Research Abstract

Observed characteristics among venture finance in Japan are different from those in Silicon Valley. We empirically investigate those characteristics and difficulties with frequently used framework of "contract theory". The theory suggests that in the presence of two fold principal-agent relations in between - "entrepreneur and venture capital" and "venture capital and end-investors" -, incentive machanisms have to be designed to make the financing process efficient
We mainly investigate how financial contracting theory meets the real contracting in Japan