Venture capitalists (VCs) are increasingly abandoning their traditional role as monitors of their portfolio companies. They are giving startup founders more equity and control and promising not to replace them with outside executives. At the same time, startups are taking unprecedented...

This review article summarizes contracting practices and academic insights on the cash flow rights held by Venture Capital (VC) investors in US startups. VCs predominantly invest through Convertible Preferred stock, combining debt-like liquidation preferences with equity conversion rights....

In this reply to Jetley and Huang (2020)'s study of arbitrage spread outliers we present data showing that the analysis of target shareholder abnormal returns in Boone, Broughman, and Macias (2019) are not materially impacted by outliers

Contracts between parties who have an on-going relationship often rely on informal norms, rather than formal legal rights, to resolve disputes and reduce transaction costs. Investors financing startup firms, however, may need to look outside of their existing network to find an entrepreneur with...

The recent surge in appraisal litigation has sparked debate over the desirability of appraisal and how this remedy should be structured. Much of this debate is based on untested assertions about appraisal's ex-ante effect on the structure and pricing of takeovers. Systematically investigating...

This amicus brief, filed with the Delaware Supreme Court in Verition Partners v. Aruba Networks, addresses two topics: (i) application of the efficient market hypothesis in appraisal litigation and (ii) empirical scholarship regarding the effect of Delaware appraisal decisions and amendments to...

Law plays a key role in determining the level of entrepreneurial action in society. Legal rules seek to define property rights, facilitate private ordering, and impose liability for legal wrongs, thereby attempting to establish conditions under which individuals may act. These rules also channel...

Black & Gilson (1998) argued that an IPO-welcoming stock market stimulates venture deals by enabling VCs to give founders a valuable “call option on control”. We study 18,000 startups to investigate the value of this option. Among firms that IPO, 60% of founders are no longer CEO. With...

We exploit a 2013 Delaware law that reduces the shareholder support threshold for two-step tender offers to investigate the impact of differing levels of shareholder support on deal structures and outcomes. After the legal change, Delaware acquisitions, as opposed to other states, are more...

Congressional overrides of prior judicial interpretations of statutory language are typically defined as equivalent to judicial overrulings, and they are presumed to play a central role in maintaining legislative supremacy. Our study is the first to empirically test these assumptions. Using a...