Investor's increased shareholding due to entrepreneur-manager collusion

Official URL: http://risc01.sabanciuniv.edu/record=b1167587 (Table of Contents)

This study presents an investor/entrepreneur model in which the entrepreneur has opportunities to manipulate the workings of the project via hidden arrangements. We provide the optimal contracts in the presence and absence of such hidden arrangements. The contracts specify the shareholding arrangement between investor and entrepreneur. Moreover, we render anexact condition necessary for the credit market to form.