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Venture Capital Contracting and Syndication : An Experiment in Computational Corporate Finance
Fluck, Zsuzsanna - 2006
This paper develops a model to study how entrepreneurs and venture-capital investors deal with moral hazard, effort provision, asymmetric information and hold-up problems. We explore several financing scenarios, including first-best, monopolistic, syndicated and fully competitive financing. We...
Persistent link: https://www.econbiz.de/10012783670
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Tax Policy, Venture Capital, and Entrepreneurship
Keuschnigg, Christian - 2006
The paper studies the effects of tax policy on venture capital activity. Entrepreneurs pursue a single high risk project each but have no own resources. Financiers provide equity finance. They must structure the entrepreneur's profit share and base salary to assure their incentives for full...
Persistent link: https://www.econbiz.de/10012783952
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Moral Hazard, Incentive Contracts and Risk : Evidence from Procurement
Lewis, Gregory - 2011
Deadlines and penalties are widely used to incentivize effort. We model how these incentive contracts affect the work rate and time taken in a procurement setting, characterizing the efficient contract design. Using new micro-level data on Minnesota highway construction contracts that includes...
Persistent link: https://www.econbiz.de/10013117563
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A Theory of Firm Decline
Clementi, Gian Luca - 2014
We study the problem of an investor who buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter's operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated...
Persistent link: https://www.econbiz.de/10013070914
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Choosing Agents and Monitoring Consumption : a Note on Wealth as a Corruption-Controlling Device
Di Tella, Rafael - 2007
poor agents as they are easier to monitor. More generally, we describe the basic problem of choosing agents and monitoring … consumption monitoring and wealth is observed, the effect of higher wealth on equilibrium bribes is ambiguous (and that the … matter, we show that monitoring consumption introduces a tendency towards low powered incentives (and more generally low …
Persistent link: https://www.econbiz.de/10012776790
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Subjective Performance Measures in Optimal Incentive Contracts
Baker, George P. - 2010
Objective measures of performance are seldom perfect. In response, incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures...
Persistent link: https://www.econbiz.de/10012763277
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Contract Renegotiation in Agency Problems
Edlin, Aaron S. - 2010
This paper studies the ability of an agent and a principal to achieve the first-best outcome when the agent invests in an asset that has greater value if owned by the principal than by the agent. When contracts can be renegotiated, a well-known danger is that the principal can hold up the agent,...
Persistent link: https://www.econbiz.de/10012763577
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The Generalized Informativeness Principle
Chaigneau, Pierre - 2014
This paper shows that the informativeness principle, as originally formulated by Holmstrom (1979), does not hold if the first-order approach is invalid. We introduce a "generalized informativeness principle" that takes into account non-local incentive constraints and holds generically, even...
Persistent link: https://www.econbiz.de/10013040535
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Misperceptions, Moral Hazard, and Incentives in Groups
Gaynor, Martin - 2021
Recent work has shown that, in the presence of moral hazard, balanced budget Nash equilibria in groups are not pareto-optimal. This work shows that when agents misperceive the effects of their actions on the joint outcome, there exist a set of sharing rules which balance the budget and lead to a...
Persistent link: https://www.econbiz.de/10013248428
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Moral Hazard in Partnerships
Gaynor, Martin; Gertler, Paul J. - 2021
In this paper, we investigate incentive structures within partnerships. Partnerships provide a classic example of the tradeoff between risk spreading and moral hazard. The degree to which firms choose to spread risk and sacrifice efficiency incentives depends upon risk preferences, for which...
Persistent link: https://www.econbiz.de/10013212361