We analyze the incentive problems that arise from the possibility for idea theft in the venture capital context, where the success of a start-up firm hinges on the unobservable efforts of both an entrepreneur, and a venture capitalist. The risk of idea theft is shown to destroy the...

We present a dynamic model of an IPO market in which firms go public to raise capital for investment. The original shareholders have inside information with respect to the quality of their firm's investment opportunities, and they decide whether to go public, how much capital to raise and...

Payout policy is viewed as a dynamic complement of security design. Security design considerations suggest that firms should optimally use equity to finance assets that are ex ante informationally-sensitive. However, business operations gradually erode the informational sensitivity of a firm's...