Reynolds Holding

FEBRUARY 12, 2023

Founders may be reluctant to take on so much risk. Founders typically invest a large percentage of their human and financial capital into their startups and consequently are unable to diversify firm-specific risk. In our model, VCs address the divergence in risk preference by striking an implicit bargain with founders.

Finance 45

Finance Firm-specific Risk Equity Specific Risk 45

Reynolds Holding

JULY 5, 2022

Most observers agree that they have little to gain from firm-specific activism and have no incentive to reduce fraud because diversification protects them from firm-specific risk. We cannot expect this relationship to change with the rise of institutional investors, especially passive ones following an index.

Firm-specific Risk 45

Firm-specific Risk Specific Risk Firm Value 45

Reynolds Holding

APRIL 15, 2025

ENDNOTES [1] [link] [2] [link] [3] Our simplified event study compares the returns of equal-weighted portfolios of DE Companies and Non-DE Companies without controls for firm-specific risk factors such as exposure to market risk, size or other industry-specific performance. [4]

Firm-specific Risk 64

Firm-specific Risk Specific Risk Marketability Market Risk 64

Reynolds Holding

DECEMBER 22, 2024

Controllers may limit managerial agency costs, but their self-interest produces so-called controlling shareholder agency costs. [2] 3] A specialized financial intermediary, the asset manager, has exploded in significance. [4]

Dividends 45

Dividends Compliance Marketability Firm-specific Risk 45