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With equity-based crowdfunding, an entrepreneur raises financing from a large number of individuals, instead of soliciting a small group of investors. This paper compares two forms of financing: the equity-based crowdfunding and the traditional loan form. We conclude that the equity-based crowdfunding can raises larger number of money for entrepreneurs than the traditional loan form owing to the entrepreneurs'...
This paper uses framework of one principal and two agents to argue the cooperation among the venture capital, business incubator and entrepreneur. The paper shows that venture capital, entrepreneur and business incubator will cooperate if their private information is fully revealed. At the same time, the three parties will put into the highest effort level and they can be also assigned the highest...
The paper studies the impact of managerial overconfidence on corporate investments under the moral hazard framework. By assuming a fully competitive and information-transparent capital market as well as rational investors, the study finds that managerial overconfidence reduces moral hazard, but may result in over- or under-investments; the relationship between managerial overconfidence and inefficient...
In the process of venture capital, due to the influence of incomplete and asymmetric information, neither of the two sides can grasp all information, but have their own information superiority. Therefore, both venture capitalists and entrepreneurs have motives to seek private benefits, and their rational choice is speculation, which leads to double moral hazard. In this situation, their speculation...
To find the root cause why it's more difficult for small and medium-sized enterprises (SMEs) to obtain loans from banks, this paper presents a new credit model from the point of view that corporate wealth is the signal of entrepreneurial ability. The result shows if there is no other mechanism to show the entrepreneurial ability under asymmetric information, Banks' assessment of the entrepreneurial...
The propagation of new technology generally has huge financing demand, and the financing is in the information asymmetry environment. Market-based financing pattern and bank-based financing pattern have different mechanisms in eliminating information asymmetry problems, and thus the efficiency to provide funds for the propagation of new technology is different. Comparing the mechanisms and efficiency...
According to the non-completeness of financial contract, there will not exist the optimal contract ex ante between financial institution and SME(small and medium enterprise). However the optimal choice may reach through renegotiation. We design optimal decision-making model of staged loaning which concludes three aspects: giving up re-loaning, loaning with renegotiation, and loaning without renegotiation...
The asymmetric information between SMEs and banks can result in moral hazard in SMEs credit market in China. In order to reduce the moral hazard this paper designs and analyzes incentive contract which can satisfy the participation constraint and incentive compatibility constraint of SMEs. The analysis result shows, by designing the interest rate and collateral value, banks can guide SMEs to invest...
Classic financial theory suggests that the external environment is effective, and there is no agent problem in corporate finance decision-making. However, actual market always deviates from the efficient market, corporate finance decision-making need to take into account manager's moral hazard. In this paper, we analyze the effect of capital structure on over-investment and on-the-job consumption...
In this paper we study the strategy model of credit loan game based on the leader follower game theory. We consider different default factor on the subjective and objective dual credit risk. We present the leader-follower game model of the enterprise, the non-banking financial institution and the bank under the multi-channel financial mode, and correspondingly give the investment and financing policies...
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