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| Tekijä: | Hsu, Y. |
| Otsikko: | Staging of venture capital investment: a real option analysis |
| Lehti: | Small business economics
2010 : OCT, VOL. 35:3, p. 265-281 |
| Asiasana: | venture capital options investments growth |
| Kieli: | eng |
| Tiivistelmä: | This study uses contingent claims analysis to examine the staging decision of venture capitalist (VC) in a principal-agent framework. Venture capital investment opportunities are considered as real options with multiple volatilities, and the entrepreneurs incentive is supposed to maximize the probability of receiving funding in the next financing round. Two celebrated formulae in the option pricing research are generalized to assess these real options. It is found that staging not only gives the VC a waiting option but also reduces the agency problem of the entrepreneur undertaking unnecessary conservative activities. Moreover, we find that the VC tends to stage her investment in the case of a lower expected growth rate in the ventures market. Nevertheless, the risk-free interest rate is not an essential factor in the staging decision. The model also provides a good explanation for present empirical evidence on the staging of venture capital investment. |
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