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Convex Analysisの二,三の進展について

I NCENTIVES ARE the essence of economics. Despite many wide-ranging claims about their supposed importance, there has been little empirical assessment of incentive provision for workers. The purpose of this paper is to critically overview existing work on the provision of incentives. Since the interests of workers and their employers are not always aligned, a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm's interest. This literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers. These include piece rates, options, discretionary bonuses, promotions, profit sharing, efficiency wages, deferred compensation, and so on. My objective here is to evaluate this literature in the light of a growing empirical literature on compensation. Where possible, I will address the literature from two perspectives. First, an underlying assumption of this literature is that individuals respond to contracts that reward performance. Accordingly, I consider whether agents behave in this way, and whether these responses are always in the firm's interest. Second, I address whether firms write contracts with these responses in mind. In other words, do contracts look like the predictions of the theory? Incentives are provided to workers

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The Provision of Incentives in Firms

We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

The venture captial industry in the United States has grown dramatically over the last two decades Annual inflows to venture funds have expanded from virtually zero in the mid-1970s to more than US$9 billion in 1997 Many of the most visible new firms -including Apple Computer, Genentech, Intel, Lotus, Microsoft and Yahoo - have been backed by venture capital funds Yet despite this tremendous growth and its visible success, venture capital remains a mysterious industry Numerous misconceptions persist about the nature and role of venture capitalists Paul Gompers and Josh Lerner's extensive research on venture capital organizations is based largely on original data sets developed through close relationships with institutional investors in venture capital funds and investment advisors "The Venture Capital Cycle" synthesizes their path-breaking work After an historical overview, the book looks at the formation of funds, the investment of the funds in operating companies and the liquidation of these investments The concluding chapter provides a road map for future research in this growing area Three themes run throughout the book The first is that all venture capitalists confront tremendous incentive and information problems The second is that because the various stages of the venture capital processes are related, the entire process is best viewed as a cycle The third is that, unlike most financial markets, the venture capital industry adjusts very slowly to shifts in the supply of capital and the demand for financing

The venture capital cycle

This paper examines empirical evidence on the impact that venture capitalists can have on the development path of new firms. We use a hand-collected data set on Silicon Valley start-up companies that allows us to "look inside the black box" and analyze the influence of venture capital on the professionalization of firms' internal organization. The evidence suggests that there is a "soft" facet to venture capitalists, in terms of supporting companies to build up their human resources within the organization. Venture capital is also important at the top, in that venture capital backed companies are more likely and faster to bring in outsiders as CEOs. These CEO replacements are often accompanied with the founder departing from the company, suggesting that venture capitalists also exhibit a "hard" facet in terms of exercising control. The paper examines how these various roles are interrelated, and shows how the role of venture capital varies with the state of the company.

Venture Capital and the Professionalization of Start-Up Firms: Empirical Evidence

In this paper, we compare the characteristics of real world financial contracts to their counterparts in financial contracting theory. We do so by conducting a detailed study of actual contracts between venture capitalists (VCs) and entrepreneurs. We consider VCs to be the real world entities who most closely approximate the investors of theory. (1) The distinguishing characteristic of VC financings is that they allow VCs to separately allocate cash flow rights, voting rights, board rights, liquidation rights, and other control rights. We explicitly measure and report the allocation of these rights. (2) While convertible securities are used most frequently, VCs also implement a similar allocation of rights using combinations of multiple classes of common stock and straight preferred stock. (3) Cash flow rights, voting rights, control rights, and future financings are frequently contingent on observable measures of financial and non-financial performance. (4) If the company performs poorly, the VCs obtain full control. As company performance improves, the entrepreneur retains / obtains more control rights. If the company performs very well, the VCs retain their cash flow rights, but relinquish most of their control and liquidation rights. The entrepreneur's cash flow rights also increase with firm performance. (5) It is common for VCs to include non-compete and vesting provisions aimed at mitigating the potential hold-up problem between the entrepreneur and the investor. We interpret our results in relation to existing financial contracting theories. The contracts we observe are most consistent with the theoretical work of Aghion and Bolton (1992) and Dewatripont and Tirole (1994). They also are consistent with screening theories.

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Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts

We compare the characteristics of real world financial contracts to their counterparts in financial contracting theory. We do so by studying the actual contracts between venture capitalists (VCs) and entrepreneurs. The distinguishing characteristic of VC financings is that they allow VCs to separately allocate cash flow rights, board rights, voting rights, liquidation rights and other control rights. We describe and measure these rights. We then interpret our results in relation to existing financial contracting theories. We also describe the interrelation and the evolution across financing rounds of the different rights. Query 1 Query 2

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We study the investment analyses of 67 portfolio investments by 11 venture capital (VC) firms. VCs consider the attractiveness and risks of the business, management, and deal terms as well as expected post-investment monitoring. We then consider the relation of the analyses to the contractual terms. Greater internal and external risks are associated with more VC cash flow rights, VC control rights; greater internal risk, also with more contingencies for the entrepreneur; and greater complexity, with less contingent compensation. Finally, expected VC monitoring and support are related to the contracts. We interpret these results in relation to financial contracting theories.

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Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses

We describe and present time series evidence on the leveraged buyout/private equity industry, both firms and transactions. We discuss the existing empirical evidence on the economics of the firms and transactions. We consider similarities and differences between the recent private equity wave and the wave of the 1980s. Finally, we speculate on what the evidence implies for the future of private equity.

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Leveraged Buyouts and Private Equity

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Per Strömberg

Papers

Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts

Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts

Characteristics, Contracts and Actions: Evidence from Venture Capitalist Analyses

Leveraged Buyouts and Private Equity

Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses