Economics, Econometrics and Finance
8 years ago

New projects with lower investment risks favored in stock market.

Palgrave Macmillan UK eBooks
Investment, Security Design and Information
Gabrielle Demange, Guy Laroque

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The article discusses how venture capitalists make decisions on new projects based on the resale values of the firms they create. The level of information available when these firms are offered on the stock market is crucial, with asymmetric information often deterring public investment. This leads capitalists to prefer projects with less information asymmetry and lower risks, as well as projects that can act as a hedge to the overall market.