The use of debt for financing new companies comes with screening and monitoring by lenders that help focusing on achieving long-term growth. Debt-induced governance further brings entrepreneurs to pursue growth opportunities. By contrast, as more debt is used and leverage increases,...

We study whether corporate income taxation affects the long-term growth of newly incorporated companies through its effect on their choice of leverage at entry. We find that a decrease in corporate income taxation leads to a sizeable decrease in leverage at entry, and that the distribution of...

We develop a theory and empirical test of how the legal system affects the relationship between venture capitalists and entrepreneurs. The theory uses a double moral hazard framework to show how optimal contracts and investor actions depend on the quality of the legal system. The empirical...

Using a comprehensive survey, we show that investors with a larger capital allocation to private equity are more specialized − measured by the degree to which the investor focuses on private equity rather than other classes of investments − and have a wider scope of due diligence and...

Recent studies, starting with Hanley Weiss and Hoberg (2010), have used textual analysis to document that voluntary disclosure of information in IPO prospectuses is associated with lower IPO underpricing. We employ an alternative measure and model the issuer's choice of information disclosure,...

Using a comprehensive survey, we show that investors with a larger capital allocation to private equity are more specialized − measured by the degree to which the investor focuses on private equity rather than other classes of investments − and have a wider scope of due diligence and...

Venture capital investors are specialized financial intermediaries that provides funding for technological innovation with the goal of realizing a capital gain within a few years. We are the first to examine the association of venture capital funding with a company's choice of innovation...

Can tax policy foster the creation of new companies? To answer this question, we assemble a novel country-industry level panel database with data on entry (by incorporation) for 17 European countries between 1997 and 2004. Our analysis is based on recent models of how corporate taxation affects...