This paper examines the combined effect of asymmetric information and private entrepreneurial risk aversion on … the model's parameters using Chilean and U.S. data shows that the entrepreneurial risk aversion assumption has more …

equity further improve diversification and raise the entrepreneur’s valuation of the firm. Finally, entrepreneurial risk … aversion can overturn the risk-shifting incentives induced by risky debt. …

underinvest relative to public firms, and allowing for risky debt partially alleviates this problem; (3) entrepreneurial risk … aversion can overturn the risk-shifting incentives induced by risky debt. We also examine cash-out option and external equity …