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M. Dewatripont and J. Tirole, “A Theory of Debt and Equity: Diversity of Securities and Manager Shareholder Congruence,” Quarterly Journal of Economics, Vol. 109, No. 3, 1994, pp. 1027-1054.

has been cited by the following article:

• TITLE: Research on the Allocation of Cash Flow Rights and Control Rights in Venture Capital Financing Contract

  AUTHORS: Yunfei Li, Zongfang Zhou

  KEYWORDS: Venture Capital Firms; Financing Contract; Self-Owned Capital; Cash Flow Rights; Control Rights

  JOURNAL NAME: Modern Economy, Vol.3 No.1, January 5, 2012

  ABSTRACT: In view of the allocation of cash flow rights and control rights in venture capital firms, a financing contract model is set up by introducing the entrepreneur’s self-owned capital in this paper. This paper analyzes the affecting factors and mechanism to the allocation of cash flow rights and control rights, shows the relationship between cash flow rights and control rights, gives the bargain intervals of the entrepreneur and the venture capitalist about the allocation of cash flow rights and control rights. It is shown that the more the entrepreneur’s self-owned capital and the higher the venture capitalist’s evaluation of the venture project and the ability of the entrepreneur, the fewer cash flow rights and control rights the venture capitalist will want; the relationship between cash flow rights and control rights of the venture capitalist is complementary but not corresponding, so the result provides a theoretical explanation for Kaplan and Stromberg’s empirical researches about the disproportion between cash flow rights and control rights in venture capital firms.