Finance

Gompers’ (1995) theoretical model of venture financing focused on miti

Gompers’ (1995) theoretical model of venture financing focused on mitigating principal-agent conflicts between the entrepreneur and an outside financier. His model explains why ventures are developed in stages: the end of each stage is a. a cash-out opportunity. b. an opportunity to harvest parts of the venture. c. a time for management to rest and […]

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Date: September 19th, 2020

Admati and Pfleiderer (1994) argued that by having both inside and out

Admati and Pfleiderer (1994) argued that by having both inside and outside investors contribute to a venture, , and thus a rational continuation/termination decision would be made at each stage of development. a. both information asymmetry and principal-agent problems are resolved b. taxes and risk are both minimized c. the overinvestment and underinvestment problems are […]

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Date: September 19th, 2020

Which of the following is NOT considered an advantage of going public?

Which of the following is NOT considered an advantage of going public? a. Sharing corporate control with outsiders. b. Better access to both equity and debt markets in the future c. Better liquidity for the firm’s shares d. The firm’s entrepreneurs have a chance to liquidate part of their investment and diversify.     ANSWER […]

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Date: September 19th, 2020