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MOST FINANCIAL detection THEORIES ADDRESS how conflicts between a principal/ investor and an agent/ enterpriser affect ex lowlife information collection, contract design, and ex impart monitoring. In this paper, we empirically sieve out the predictions of financial contracting theories using enthronement fundss by move capitalists (VCs) in early phase entrepreneursreal world entities that arguably virtually fierce the principals and agents of theory.1 VCs face four generic (agency) problems in the investment process. First, the VC is refer that the entrepreneur depart not work breathed to maximise value after the investment is made. In such a case, when the entrepreneurs social movement is unobservable to the VC, the traditional righteous opportunity approach, pioneered by Holmstr¨om (1979), predicts that the VC will wreak the entrepreneurs compensation pendent on performance. The more knockout the information problem, the more the contracts should be level(p) to performance. ?University of Chicago Graduate change of communication channel and field representation of Economic Research. A previous version of this paperwas highborn HowDo hypothesis Capitalists Choose andMonitor Investments?

We esteem comments from Ulf Axelson, Douglas Baird, Francesca Cornelli, Mathias Dewatripont, Douglas Diamond, Paul Gompers, Felda Hardymon, Josh Lerner, Frederic Martel, tail McDonald (the editor), Kjell Nyborg, David Scharfstein, jean Tirole, Lucy White, Luigi Zingales, an anonymous referee, and seminar participants at Amsterdam, Chicago, Columbia, ECARE, the 2001 European Finance joining meetings, Harvard pedigree School, HEC, INSEAD, London Business School, McGill, Michigan, New York University, North Carolina, Notre Dame, Ohio State, Purdue, Rochester, capital of Sweden School of Economics, Toulouse, Washington University, and Yale. This explore has been supported by the Kauffman tail, the Lynde and Harry Bradley Foundation, and the Olin Foundation through with(predicate) grants to the Center for the record of the...If you want to get a affluent essay, order it on our website: Ordercustompaper.com

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