Business angels and Agency Costs

GUERIN, Nicolas (2016) Business angels and Agency Costs. [Dissertation (University of Nottingham only)]

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Abstract

This paper examines business angels’ behaviours towards agency costs by studying how business angels reduce conflicts of interests with entrepreneurs. The theoretical framework of this paper is based on the agency theory and the incomplete contract theory. In order to make this study more accurate, corporate governance mechanisms were also used to decipher and understand business angels’ behaviours. Using these theories, the research framework is based on four different areas of interest: contracts and the different rights these involve, informal and formal involvement of business angels in investments, the relationship between the entrepreneurs and the business angels and finally corporate governance mechanisms.

This paper is based an analysis of the results of 5 interviews and a questionnaire that was sent to 78 British and French business angels. From these the impact of different factors on the agency costs was determined. The findings show that the business angels’ involvement, the trustworthy relationship between the business angels and the entrepreneurs and certain corporate governance mechanisms can successfully mitigate against agency costs. On the contrary, analysis results showed that using extensive control and monitoring rights or appointing non-executive directors onto the boards increased agency costs. Thus, this paper answers how business angels can mitigate agency costs with entrepreneurs.

Item Type: Dissertation (University of Nottingham only)
Keywords: Business angels; Entrepreneurs; Agency costs; Corporate governance
Depositing User: GUERIN, Nicolas
Date Deposited: 10 Mar 2017 12:39
Last Modified: 13 Mar 2017 12:21
URI: http://eprints.nottingham.ac.uk/id/eprint/36031

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