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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26619
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| Title: | An Analysis of Shareholder Agreements |
| Authors: | Chemla, Gilles
Gille, Michel
Ljungqvist, Alexander |
| Keywords: | Shareholder Agreements
Put Options
Call Options
Pre-emption Rights
Catch-up Clauses
Drag-along Rights
Demand Rights
Tag-along Rights |
| Issue Date: | 7-Jan-2002 |
| Series/Report no.: | FIN-01-066 |
| Abstract: | Shareholder agreements govern the relations among shareholders in
privately-held companies, such as joint ventures or venture
capital-backed firms. We provide an economic explanation for the use of
put and call options, preemption rights, catch-up clauses, drag-along
rights, demand rights, and tag-along rights in shareholder agreements.
We view these clauses as a response to a problem of dynamic, double
moral hazard, whereby the value of the venture depends on ex ante
investments and ex post transfers. Contract clauses i) preserve the
incentives to make ex ante investments and ii) minimize ex post
transfers. We extend our framework to discuss the use of other clauses,
such as the option to extend the life of a business alliance. |
| URI: | http://hdl.handle.net/2451/26619 |
| Appears in Collections: | Economics Working Papers
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