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Financial Contracting (financial + contracting)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

FINANCIAL CONTRACTING BETWEEN MANAGERS AND VENTURE CAPITALISTS: THE ROLE OF VALUE-ADDED SERVICES, REPUTATION SEEKING, AND BARGAINING POWER

THE JOURNAL OF FINANCIAL RESEARCH, Issue 4 2004
Richard Fairchild
Abstract I analyze manager and venture capitalist bargaining over the financial contract in the face of double-sided moral hazard problems. The allocation of cash flows depends on the combined effects of value-added services, reputation seeking, and bargaining power. Welfare is maximized when the venture capitalist has high value-adding capabilities, the market for reputation is informationally efficient, and the manager has bargaining power. Furthermore, I consider the effect of exit strategies on the financial agreement. I also consider bidding between venture capitalists of differing abilities. Generally, the superior venture capitalist wins with a lower bid, but in some cases the inferior venture capitalist can win. [source]

Venture Capital Financial Contracting and the Valuation of High Technology Firms.

ECONOMICA, Issue 293 2007
Edited by JOSEPH A. McCAHERY, LUC RENNEBOOG
No abstract is available for this article. [source]

EQUILIBRIUM LENDING MECHANISM AND AGGREGATE ACTIVITY,

INTERNATIONAL ECONOMIC REVIEW, Issue 3 2010
Cheng Wang
We construct a model of the credit market where financial contracting is subject to costly state verification and moral hazard. The economy's aggregate activity and its equilibrium lending mechanism are determined jointly. We analyze how changes in the model's exogenous variables, including the returns of the economy's investment projects and the supply of loans, affect the economy's aggregate output and the types of the credit through which investment is funded. [source]

Information and Control in Ventures and Alliances

THE JOURNAL OF FINANCE, Issue 5 2005
WOUTER DESSEIN
ABSTRACT This paper develops a theory of control as a signal of congruence of objectives, and applies it to financial contracting between an investor and a privately informed entrepreneur. We show that formal investor control is (i) increasing in the information asymmetries ex ante, (ii) increasing in the uncertainty surrounding the venture ex post, (iii) decreasing in the entrepreneur's resources, and (iv) increasing in the entrepreneur's incentive conflict. In contrast, real investor control,that is, actual investor interference,is decreasing in information asymmetries. Control rights are further such that control shifts to the investor in bad states of nature. [source]