Do entrepreneurs consider the risk of their business equity when making investment portfolio allocations? Many people compartmentalize different risks and consider them separately, called mental accounting. Alternatively, the risk substitution hypothesis suggests that entrepreneurs would offset...

A theoretical model of firm growth under uncertaintyis developed in order to account for the high failure rate of young firms. Thismodel pulls together several strands of the existing literature, including: theportfolio approach to balancing risk and return; a variation on Gibrant's lawas a...