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An Analysis of Shareholder Agreements

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Author Info
Chemla, Gilles
Habib, Michel Antoine
Ljungqvist, Alexander P

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Abstract

Shareholder agreements govern the relations among shareholders in privately-held companies, such as joint ventures or venture capital-backed …rms. We provide an explanation for the use of put and call options, pre-emption rights, drag-along rights, demand rights, tag-along rights, and catch-up clauses in shareholder agreements. We view these clauses as serving to preserve the parties’ incentives to make ex ante investments when ex post renegotiation may alter the parties’ shares of the payoff. We extend our framework to discuss the use of other clauses, such as the option to extend the life of a business alliance.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3457.

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Date of creation: Jul 2002
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Handle: RePEc:cpr:ceprdp:3457

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Related research
Keywords: call options; catch-up clauses; demand rights; drag-along rights; pre-emption rights; put options; shareholder agreements; tag-along rights;

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Find related papers by JEL classification:
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  6. Bergemann, Dirk & Hege, Ulrich, 1997. "Venture Capital Financing, Moral Hazard and Learning," CEPR Discussion Papers 1738, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Steven N. Kaplan & Per Stromberg, 2003. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 281-315, 04. [Downloadable!] (restricted)
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  17. Gompers, Paul A, 1995. " Optimal Investment, Monitoring, and the Staging of Venture Capital," Journal of Finance, American Finance Association, vol. 50(5), pages 1461-89, December. [Downloadable!] (restricted)
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Full references

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Chemla, Gilles & de Bettignies, Jean-Etienne, 2003. "Corporate Venture Capital: The Upside of Failure and Competition for Talent," CEPR Discussion Papers 4139, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Bienz, Carsten & Walz, Uwe, 2007. "Evolution of Decision and Control Rights in Venture Capital Contracts: An Empirical Analysis," Discussion Papers 2007/13, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
    Other versions:
  3. Ferreira, Daniel & Ornelas, Emanuel & Turner, John L., 2007. "Unbundling Ownership and Control," CEPR Discussion Papers 6257, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Peter Roosenboom, 2005. "Bargaining on Board Structure at the Initial Public Offering," Journal of Management and Governance, Springer, vol. 9(2), pages 171-198, 06. [Downloadable!] (restricted)
  5. Kaplan, Steven & Martel, Frederic & Strömberg, Per Johan, 2003. "How Do Legal Differences and Learning Affect Financial Contracts?," CEPR Discussion Papers 4161, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  6. Jean-Etienne De Bettignies & Gilles Chemla, 2008. "Corporate Venturing, Allocation of Talent, and Competition for Star Managers," Post-Print halshs-00365942_v1, HAL. [Downloadable!]
  7. McCahery, J.A. & Vermeulen, E.P.M., 2003. "The evolution of closely held business forms in Europe," Discussion Paper 12, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
  8. Roosenboom, P.G.J. & Schramade, W.L.J., 2005. "The Price Of Power: Valuing The Controlling Position Of Owner-Managers In French Ipo Firms," Research Paper ERS-2005-011-F&A Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
  9. Bennedsen, Morten & Nielsen, Kasper Meisner & Nielsen, Thomas Vester, 2008. "Private Contracting and Corporate Governance: Evidence from the Provision of Tag-Along Rights in an Emerging Market," CEI Working Paper Series 2008-2, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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