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Venture Capital as an Alternative Means to Allocate Capital: An Agency-Theoretic View

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  • Edgar Norton

Abstract

The venture capital process is one of many methods of capital allocation. In a capital allocation process, investors acquire funds; potential investments are Identified and reviewed; Investment terms are negotiated; the investment must be monitored and ultimately harvested. The capital allocation process is full of potential agency problems. The venture capital process In particular provides a rich setting for the analysis of agency cost issues. This paper reviews the capital allocation process that occurs in venture capital investments. Suggestions are made for future research to study the role that agency cost issues play In the venture capital process.

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  • Edgar Norton, 1996. "Venture Capital as an Alternative Means to Allocate Capital: An Agency-Theoretic View," Entrepreneurship Theory and Practice, , vol. 20(2), pages 19-29, January.
    • Handle: RePEc:sae:entthe:v:20:y:1996:i:2:p:19-29
    DOI: 10.1177/104225879602000203
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    References listed on IDEAS

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    Cited by:

    1. David Williams & W. Duncan & Peter Ginter, 2010. "Testing a model of signals in the IPO offer process," Small Business Economics, Springer, vol. 34(4), pages 445-463, May.

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