This paper develops a model to study how entrepreneurs and venture-capital investors deal with moral hazard, effort provision, asymmetric information and hold-up problems. We explore several financing scenarios, including first-best, monopolistic, syndicated and fully competitive financing. We...

The fastest growing segment of private equity (PE) deals is secondary buyouts (SBOs)—sales from one PE fund to another. Using a comprehensive sample of leveraged buyouts, we investigate whether SBOs are value-maximizing, or reflect opportunistic behavior. To proxy for adverse incentives, we...

This book highlights the achievements and challenges of the ongoing process of financial integration in Europe.   This unique collection will be of great interest to economists and experts in the fields of financial markets and European integration from central, commercial and investment...

This paper develops a theory of mergers and divestitures wherein the motivation for mergers stems from the inability to finance marginally profitable, possibly short-horizon projects as stand-alone entities due to agency problems between managers and potential claimholders. A conglomerate merger...

This paper investigates the design of privatization mechanisms in emerging market economies characterized by political constraints that limit the set of viable privatization mechanisms. Our objective is to explain the striking diversity of privatization mechanisms observed in practice and the...

Using data from the Wisconsin Entrepreneurial Climate Study, we study the sources of firms' finance during the very early stages of their lives. Our focus is the evolution of the mix of financial capital from 'insiders' and 'outsiders' as firms age. We find that at the beginning of firms' life...

This paper focuses on the dynamic capital structure of firms: Why firms choose very different capital structure in different stages of their life-cycles? In a model of optimal financial contracting, we investigate whether subsequent financing decisions

Enterprises, small or large, rely heavily on long-term financing arrangements to fund their operations. However, it has proved difficult for financial theory to justify the use of long-term contracts when the manager has the ability to divert or manipulate the cash flows, and when it is...

This paper investigates the distribution of equity ownership between entrenched corporate insiders and dispersed outsiders when management has the ability to divert or manipulate the cash flows and when it is costly for equity holders to verify or prove any managerial wrongdoing for a third...