Abstract
The biggest difference in the incentive bargains between entrepreneurs and venture capitalists in the US and Japan is that American entrepreneurs abandon control while Japanese entrepreneurs do not. Years ago, Black & Gilson tried to explain the difference by the existence and non-existence of liquid IPO markets. Although now there are multiple liquid IPO markets in Japan, Japanese entrepreneurs are still reluctant to abandon control of their companies to venture capitalists. While there must be many complementary reasons, such as different market situations, different social norms, etc., for the difference, I will raise a hypothesis that it can be partly explained by the different legal systems.
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