"We develop a model to study the interplay between advice and agency costs in entrepreneurial financing. We demonstrate a tension between the entrepreneur's motivation for effort and the investor's willingness to finance the project. Advice to the entrepreneur exacerbates this tension....

"We study how long-term contracts condition on a natural flow of information that reduces asymmetric information over time. If such interim information is verifiable, optimal contracts achieve the first best. Under nonverifiability, the optimal contract depends on the signal's accuracy and...