Module 5: Capital Structure and Contracting

This module aims to answer the following questions:

1. What factors drive the contracting between entrepreneur and investor?
2. What are the patterns of contracting and security design in venture capital-backed startups?
3. What does the capital structure of the entrepreneurial firm look like?

Required and Suggested Readings

Read these papers before class and skim the articles on the week 5 reading list.

Paper 1

Kaplan, S.N. and Strömberg, P. (2004) ‘Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses’, The Journal of Finance, 59(5), pp. 2177-2210.

Paper 2

Robb, A.M. and Robinson, D.T. (2014) ‘The Capital Structure Decisions of New Firms’, The Review of Financial Studies, 27(1), pp. 153-179.

Paper 3

Amornsiripanitch, N., Gompers, P.A. and Xuan, Y. (2019) ‘More than Money: Venture Capitalists on Boards’, The Journal of Law, Economics, and Organization, 35(3), pp. 513-543.