Venture capital contracting under asymmetric information

Article Abstract:

The presence of asymmetric information in business contracts plays a crucial role in determining the use of debt and preferred equities. The risk of developing asymmetric information between venture capitalists and business owners is particularly high during the initial stage of the contracting process, thereby inducing an opportunistic behavior on the part of entrepreneurs. Under such conditions, equity contracting serves as one of the best recourses, eliminating the need for foreclosure options, while maintaining a considerable degree of seniority in the event of bankruptcy.

Debt, Debt equity conversion

---

Venture capital financing, moral hazard and learning

Article Abstract:

The timely release of funds and the efficiency of information control are vital factors in determining the success of venture capital firms. Due to the moral hazards and learning risks associated with venture capital, business owners must be able to discern when to abandon a particular project or continue funding it. This may be efficiently achieved through the use of a dynamic agency model which provides a good leverage for long-term contracting while optimizing return over time and research potentials.

Methods, Management, Contracts

---

Divestments and financial distress in leveraged buyouts

Article Abstract:

A survey of wealth transfer in leveraged buyouts by 134 divestment announcements of companies showed that abnormal returns in a divestment announcement is determined by the ability of the obtained price to equal the expected price. Distressed firms were shown to benefit little from such divestment announcements, while healthy firms were shown to benefit significantly from the announcements.

Models, Capital market, Capital markets, Corporate divestiture, Divestiture

Similar abstracts:

• Abstracts: Managerial ownership, accounting choices, and informativeness of earnings. Stock price informativeness of accounting numbers: evidence on earnings, book values and their components
• Abstracts: Profiting from transformation. National Finance applies for Thai banking license. Financing Bangladesh's emerging entrepreneurs
• Abstracts: Use of partnership in international dealings can be beneficial for both inbound and outbound transactions. Taxpayer Cannot Combine Passive and Nonpassive Operations Into a Single Undertaking
• Abstracts: The banks' perspective. Distributions of employer securities from qualified plans - does it get any better than this?
• Abstracts: Survival of the fittest or the fattest? Exit and financing in the trucking industry. Initial public offerings: an analysis of theory and practice

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.