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SSRN Electronic Journal
Article . 2007 . Peer-reviewed
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A Two-Sided Matching Model of Monitored Finance

Authors: Kaniska Dam;

A Two-Sided Matching Model of Monitored Finance

Abstract

We analyse a model of two-sided matching and incentive contracts where expert investors (venture capitalists) with different monitoring capacities are matched with firms with different levels of initial wealth. Firms do not have sufficient start-up capital to cover their project costs and hence, seek external financing. In equilibrium, the matching and the payoffs of the venture capitalists and the firms are determined simultaneously. More effective VCs and higher-wealth firms consume higher payoffs. We also show that, in equilibrium VCs with higher monitoring ability invest in firms with lower initial wealth following a negatively assortative matching pattern.

Country
Belgium
Related Organizations
Keywords

Assortative matching, A Two-Sided Matching Model, Monitored Finance, venture capital, assortative matching, incentive contracts, Incentive contracts, Venture capital, jel: jel:G18, jel: jel:D82, jel: jel:C78, jel: jel:E44, jel: jel:G24

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    popularity
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    influence
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
3
Average
Average
Average
Green
bronze