Firm-specific Risk Related Topics 
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.
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.
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