We develop a new rationale for the formation of VC syndicates, and theoretically analyze the dynamics of VC syndicates. In our model, an entrepreneur needs financing from VC investors to implement his firm's positive NPV project. In addition to financing, VCs can provide the firm with two inputs...

This paper provides evidence that venture capital (VC) syndication creates value for entrepreneurial firms in two dimensions. First, VC syndication creates product market value for their portfolio firms. Specifically, VC syndicates invest significant amounts in younger firms, in earlier...

This paper presents the first theoretical analysis of the choice of firms between preparing and not preparing the equity market in advance of a possible dividend cut. In our model, a firm has assets in place that will generate an intermediate cash flow, and a growth opportunity. Firm insiders...

We analyze how corporate venture capital (CVC) differs from independent venture capital (IVC) in nurturing innovation in entrepreneurial firms. We find that CVC-backed firms are more innovative, as measured by their patenting outcome, although they are younger, riskier, and less profitable than...

This paper examines the causes and consequences of venture capital (VC) stage financing. Using information about the physical location of an entrepreneurial firm and the geographic distance between the VC investor and the firm, I show that VC investors located farther away from an...

Does more leverage always worsen the debt agency problem? This paper presents a unified analysis that accounts for both risk-shifting and under-investment debt agency problems. For firms with positive marginal volatility of investment (defined as the change in cash flow volatility corresponding...