Information and control in ventures and alliances

Deskripsi

This paper develops a theory of control as a signal of congruence of objectives, and applies it to financial contracting between an investor and a privately informed entrepeneur. We show that formal investor control is (i) increasing in the information asymmetries ex ante, (ii) increasing in the uncertainty surrounding the venture ex post, (iii) decreasing in the entrepeneur's resources, and (iv) increasing in the entrepeneur's incentive conflict..Printed Journal