How does insider ownership affect shareholder value? We answer this question by examining how the marginal valuation of new investment projects announced by Indian firms varies with the level of insider holding in the firm, and other firm and project characteristics. We find that among projects...

How do firms vary their capital investment and financing policies in response to business cycle fluctuations within their industry? To address this question, we use the regime-switching approach to compute the quarterly time-series of the probability of a future industry downturn for industry...

In most venture capital financed firms, neither the venture capitalist nor the entrepreneur has exclusive authority over some of the key corporate decisions. For example: the decision whether the firm should undertake an IPO or be sold to a larger rival usually requires the approval of both the...

We analyze how entrepreneurial firms choose between two funding institutions: banks, who monitor less intensively and face liquidity demands from their own investors, and venture capitalists, who can monitor more intensively but face a higher cost of capital due to the liquidity constraints that...

In most venture capital financed firms, neither the VC nor the manager has exclusive authority over some of the key corporate decisions. For example: the decision whether the firm should undertake an IPO or be sold to a larger rival usually requires the approval of both the manager and the VC....

We analyze how optimal contracting between an entrepreneur and a financial institution depends on the cash flow characteristics of the entrepreneur's firm. Because the entrepreneur prefers continuing the firm over liquidating it, and aggressive continuation strategies over conservative...