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An Analysis of Shareholder Agreements

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  • Chemla, Gilles
  • Habib, Michel Antoine
  • Ljungqvist, Alexander P

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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Bibliographic Info

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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References

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  1. Steven N. Kaplan & Per Strömberg, 2000. "Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts," CRSP working papers 513, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
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Citations

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Cited by:
  1. Jean-Etienne De Bettignies & Gilles Chemla, 2008. "Corporate Venturing, Allocation of Talent, and Competition for Star Managers," Post-Print halshs-00365942, HAL.
  2. De bettignies, Jean-Etienne & Chemla, Gilles, 2003. "Corporate Venture Capital: The Upside of Failure and Competition for Talent," Economics Papers from University Paris Dauphine 123456789/6366, Paris Dauphine University.
  3. Kaplan, Steven N. & Martel, Frederic & Strömberg, Per, 2004. "How Do Legal Differences and Learning Affect Financial Contracts?," SIFR Research Report Series 28, Institute for Financial Research.
  4. Carvalhal, Andre, 2012. "Do shareholder agreements affect market valuation?," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 919-933.
  5. Ferreira, Daniel & Ornelas, Emanuel & Turner, John L., 2007. "Unbundling Ownership and Control," CEPR Discussion Papers 6257, C.E.P.R. Discussion Papers.
  6. Bienz, Carsten & Walz, Uwe, 2007. "Evolution of Decision and Control Rights in Venture Capital Contracts: An Empirical Analysis," Discussion Papers 2007/13, Department of Business and Management Science, Norwegian School of Economics.
  7. Belot, François, 2009. "Do target shareholder agreements induce bidders to pay higher premiums?," Economics Papers from University Paris Dauphine 123456789/2941, Paris Dauphine University.
  8. Belot, François, 2010. "Excess control rights and corporate acquisitions," Economics Papers from University Paris Dauphine 123456789/5922, Paris Dauphine University.
  9. Belot, François, 2008. "Shareholder agreements and firm value: Evidence from French listed firms," Economics Papers from University Paris Dauphine 123456789/3031, Paris Dauphine University.
  10. 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.
  11. Roosenboom, Peter & Schramade, Willem, 2006. "The price of power: Valuing the controlling position of owner-managers in French IPO firms," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 270-295, January.
  12. Bennedsen, Morten & Nielsen, Kasper Meisner & Nielsen, Thomas Vester, 2012. "Private contracting and corporate governance: Evidence from the provision of tag-along rights in Brazil," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 904-918.

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