HEC Research Papers Series,
HEC Paris

Abstract: Can reducing contracting costs between entrepreneurs and investors improve entrepreneurial success? We assemble a novel dataset of company bylaws covering the near-universe of firms incorporated in France between 2004 and 2012. We show that many new firms, including non-VC-backed firms, tailor their bylaws by modifying default provisions on ownership and control rights, while cash-flow rights are less frequently customized. Such tailoring correlates with proxies for asymmetric information and entrepreneur sophistication. Exploiting a 2008 French reform that lowered the cost of bylaws customization, we show that increased contractual flexibility led to higher equity financing at creation and to persistent increases in investment, employment, and revenue growth.

Keywords: Financial contracting; Entrepreneurship; Equity financing

JEL-codes: G32; K22; L14; L16; M13

96 pages, First version: April 20, 2026. Revised: July 1, 2026.

Full text files

papers.cfm?abstract_id=6551658 HTML file Full text

Download statistics

• HEC Paris
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to David Melon ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1631This page generated on 2026-07-16 10:30:32.