Convertible preferred stock in venture capital financing
We develop a model in which cash-constrained entrepreneurs seek a venture capitalist (VC) to finance a new firm. Costly monitoring is employed by VCs to reduce entrepreneurial moral hazard. When monitoring reveals poor performance, VCs want to punish the entrepreneur with liquidation. However, when...
| Main Authors: | , |
|---|---|
| Format: | Working paper |
| Published: |
University of Oxford
2006
|