Venture Capital Contracting and the Valuation of High Technology Firms or Competition and Growth

Venture Capital Contracting and the Valuation of High-Technology Firms

Author: Joseph McCahery

This collection of state-of-the-art essays explores the important role of venture capital finance used to invest mainly in small and medium size firms with good growth prospects. It shows that important features of contract and organizational law have substantially contributed to the competitiveness of the US venture capital industry.

Table of Contents:

	List of Figures
	List of Tables
	List of Abbreviations
	List of Contributors
1	Venture Capital Financing of Innovative Firms: An Introduction	1
2	Venture Capital and the Structure of Capital Markets: Banks versus Stock Markets	29
3	Going Public and the Option Value of Convertible Securities in Venture Capital	60
4	Evidence on the Venture Capitalist Investment Process: Coritracting, Screening, and Monitoring	73
5	The Value of Benchmarking	83
6	Venture Capital on the Downside: Preferred Stock and Corporate Control	108
7	Law, Innovation, and Finance	133
8	Business Organization Law and Venture Capital	162
9	Venture Capital and Innovation: Clues to a Puzzle	188
10	Real Options: Principles of Valuation and Strategy	227
11	The Market Valuation of Biotechnology Firms and Biotechnology R&D	251
12	Internet Portals as Portfolios of Entry Options	281
13	The Dotcom Premium: Rational Valuation or Irrational Exuberance?	297
14	The Liquidation Preference in Venture Capital Investment Contracts: A Real Option Approach	318
15	The Extent of Venture Capital Exits: Evidence from Canada and the USA	339
16	Greenhorns, Yankees, and Cosmopolitans: Venture Capital, IPOs, Foreign Firms, and US Markets	371
17	Lock-in Agreements in Venture Capital-backed UK IPOs	396
18	The Effect of Market Conditions on Initial Public Offerings	437
19	The Rise and Fall of the European New Markets: On the Short- and Long-run Performance of High-tech Initial Public Offerings	464
	Author Index	493
	Subject Index	499

New interesting textbook: Credit to the Community or Sustaining Environmental Management Success

Competition and Growth: Reconciling Theory and Evidence

Author: Philippe Aghion

Winner of the 2006 Schumpeter Prize Competition.

Though competition occupies a prominent place in the history of economic thought, among economists today there is still a limited, and sometimes contradictory, understanding of its impact. In Competition and Growth, Philippe Aghion and Rachel Griffith offer the first serious attempt to provide a unified and coherent account of the effect competition policy and deregulated entry has on economic growth.

The book takes the form of a dialogue between an applied theorist calling on "Schumpeterian growth" models and a microeconometrician employing new techniques to gauge competition and entry. In each chapter, theoretical models are systematically confronted with empirical data, which either invalidates the models or suggests changes in the modeling strategy. Aghion and Griffith note a fundamental divorce between theorists and empiricists who previously worked on these questions. On one hand, existing models in industrial organization or new growth economics all predict a negative effect of competition on innovation and growth: namely, that competition is bad for growth because it reduces the monopoly rents that reward successful innovators. On the other hand, common wisdom and recent empirical studies point to a positive effect of competition on productivity growth. To reconcile theory and evidence, the authors distinguish between pre- and post-innovation rents, and propose that innovation may be a way to escape competition, an idea that they confront with microeconomic data. The book's detailed analysis should aid scholars and policy makers in understanding how the benefits of tougher competitioncan be achieved while at the same time mitigating the negative effects competition and imitation may have on some sectors or industries.