Venture capital financing, moral hazard, and learning
Abstract
We consider the provision of venture capital in a dynamic agency model. The value of the venture project is initially uncertain and more information arrives by developing the project. The allocation of the funds and the learning process are subject to moral hazard. The optimal contract is a time-varying share contract which provides intertemporal risk-sharing between venture capitalist and entrepreneur. The share of the entrepreneur reflects the...
Paper Details
Title
Venture capital financing, moral hazard, and learning
Published Date
Aug 1, 1998
Volume
22
Issue
6-8
Pages
703 - 735
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