Entrepreneurial ability, venture investments, and risk sharing

  title={Entrepreneurial ability, venture investments, and risk sharing},
  author={R. Amit and Lawerence Glosten and E. Muller},
  journal={Management Science},
  • R. Amit, Lawerence Glosten, E. Muller
  • Published 1990
  • Economics
  • Management Science
  • A number of issues that relate to the desirability and implications of new venture financing are examined within a principal-agent framework that captures the essence of the relationship between entrepreneurs and venture capitalists. The model suggests: 1 As long as the skill levels of entrepreneurs are common knowledge, all will choose to involve venture capital investors, since the risk sharing provided by outside participation dominates the agency relationship that is created. 2 The less… CONTINUE READING
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