Traditional finance theory suggests that riskier investments should yield higher returns. Challenging this notion … aversion, resulting in lower return investment choices. Therefore, we assess whether incentives associated with stock option … greater risk aversion rather than excessive risk-taking. Overall, our results imply that risk-taking incentives (i.e., vega …

During contract negotiations with a startup, a venture capitalist (VC) can receive preferred stock and additional cash … flow rights, which result in a higher return than that of common stock. Incorporation of contract terms into the payoff to …