Financing breakthroughs under failure risk

• 成果类型: Article
• 署名作者: Mayer, Simon
• 署名单位: University of Chicago; Hautes Etudes Commerciales (HEC) Paris
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2022.01.005
• 发表日期: 2022
• 页码: 807-848
• 关键词: innovation; venture capital; Agency conflicts; adverse selection; dynamic contracting

摘要

In a dynamic principal-agent model, the principal, financing the project, cannot observe project failure and the agent, developing the project, can hide failure. As there is a tension between incentives for disclosure of failure and project development, the optimal contract does not reward failure and incentivize disclosure of failure during an initial unconditional financing stage. During the subsequent disclosure stage, time-decreasing rewards for failure provide incentives for disclosure of failure. The continuation of financing becomes more performance-sensitive across stages, and the agent's incentives are backloaded. The model explains several empirical patterns in venture capital financing and the financing of innovation.