The relationship between a venture capitalist and an entrepreneur is modeled to investigate the impact of public subsidies on venture capital investments in start-up enterprises. In this model, the venture capitalist only finances start-up enterprises if he has sufficient expertise to make...

This paper analyses the impact of public equity schemes on venture capitalist's incentives to finance start-up enterprises and to support the management teams. In a double-sided moral hazard model, it is shown that experienced venture capitalists, who have already financed start-up enterprises,...

Using an agency framework, this paper examines advantages of offering venture capitalists a choice between public equity and loan schemes. Both schemes can be used to promote venture capital investments in hightechnology enterprises since they encourage inexperienced venture capitalists to...

Credit rating agencies have been widely criticized to issue inflated ratings due to the issuer-pay business model. This paper analyzes the corporate bond rating standards and tests whether reputation concerns are powerful enough to discipline the rating agencies. Through a simple theoretical...

The issuer's dichotomous choice to include warrants as underwriting compensation is studied for a sample of 1,991 negotiated firm commitment seasoned equity issues. Using two-stage logit to adjust for self-selection, we find the issuer's decision to use or not use warrants is consistent with the...

Using a large sample of US public debt issues we show that personal connections between directors of issuing companies and rating agencies result in higher credit ratings. We estimate the average effect to be about one notch. Moreover, our tests indicate that issues by connected firms are 30%...

In merger agreements, the seller makes contractual representations and warranties (“reps”) about the state of the target, e.g., attesting to the accuracy of the target’s financial statements. We obtain a proprietary sample of claims for breaches of the reps in acquisition agreements...

This paper presents a comparative perspective on risk perception and decision-making within United States (US) and United Kingdom (UK) entrepreneurial communities since the bursting of the technology, media, and telecommunications (TMT) bubble in 2000. Using an empirical approach drawn from...

This paper analyses the impact of public equity schemes on venture capitalist's incentives to finance start-up enterprises and to support the management teams. In a double-sided moral hazard model, it is shown that experienced venture capitalists, who have already financed start-up enterprises,...

Using an agency framework, this paper examines advantages of offering venture capitalists a choice between public equity and loan schemes. Both schemes can be used to promote venture capital investments in high-technology enterprises since they encourage inexperienced venture capitalists to...