This paper characterizes the optimal dynamic contract between risk-averse entrepreneurs and risk-neutral investors in an infinite horizon setting with information asymmetry. Under certain conditions, the optimal contract can be implemented with the entrepreneur’s ownership of some of the firm’s shares (insider ownership). This ownership evolves over time and tends to decrease as the entrepreneu...

Are institutional monitoring effects induced by the quality and reputation of a firm’s management? We hypothesize that better and more reputable managers can convey more information and give a certifying effect with regard to firm value to informed and potential investors, thus reducing information asymmetry. This study provides empirical evidence to illustrate the positive association between ...

Abstract. We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and t...

Performance measurement that accurately reflects the goals of fund investors and managers has long been a topic of active discussion. Most modern performance measures differ from classical ones (such as the Sharpe ratio) in two key ways; first, they reflect the market practice of assessing performance against a benchmark, second, they account for the asymmetry in returns distributions by separa...

Order Flow Patterns around Seasoned Equity Offerings and their Implications for Stock Price Movements In this study, we employ order imbalance measures to provide evidence that there exists an individual/institutional dichotomy in reactions to seasoned equity offerings (SEOs). The evidence supports the notion that small, possibly näıve, individual investors keep trading SEO stocks aggressively ...

Big data mining and analytics help uncover hidden patterns correlations in business. It serves as the optimal tool to interpret behavior of companies specific environments. Built on large amount obtained from various sources, this paper examines relationship between tone corporate social responsibility(CSR) reports degree information asymmetry investors managers. Python software is used for col...

We examine how adverse local experiences that are uninformative of future returns affect households’ investment behavior in the short term. Using data from a German online brokerage and survey, we show retail investors sharply reduce risk taking response to nearby firm bankruptcies. Adjustments occur through immediate transitory increases trading, work more pessimistic expectations about aggreg...

Mixed views on automated trading in the extant literature lead to ongoing debates algorithmic (AT) and high-frequency (HFT). This study elaborates rising ethical issues regulatory challenges of emerging markets. While developed capital markets are dominated by institutional investors, consist a large proportion retail investors who may suffer from aggravated liquidity asymmetry stock price turb...

This paper reports evidence that Regulation Fair Disclosure has had its desired effect of reducing selective disclosure of information about future earnings to individual analysts without reducing the total amount of information disclosed. In particular, it finds that multi-forecast days, which typically follow public announcements or events, now account for over 70 percent of the new informati...