The paper offers a new explanation for the widely observed use of redeemable and convertible preferred stock in venture capital finance. Redeemable and convertible preferred stocks can be used to endogenously allocate cash flow and control rights as a function of the state of nature, the...

Bank planning models should at least meet two requirements. Firstly, the multiperiod character of most banking activities should be considered. Secondly, one should allow for the uncertainty of future events. Lots of models have been constructed fulfilling these requirements. But only in a few...