Artículo de publicación ISIThis article departs from the traditional analysis of the effects of risk aversion in entrepreneurship to study the determinants of entrepreneurial risk aversion in developing a new venture and becoming an entrepreneur.We took fear of failing as a proxy for risk aversion and applied our analysis to the most important Latin American economies.We observed that being male, having more years of formal education and believing to have the necessary skills to develop a new venture decreased the probability of feeling a fear of failing and, thus, eventually increased the probability of developing a new venture. Age affects risk quadratically (first positively, but after some point, negatively), and if there is a prior experience of having shut down a business, risk aversion increases, that is, the probability of feeling a fear of failing, which reduces the probability of becoming an entrepreneur

This paper focuses on the relationship between the venture capitalist and the entrepreneur. In particular, it analyses how both players' unobservable effort levels affect the equity share that the entrepreneur is willing to cede to the venture capitalist. We solve the entrepreneur's maximization problem in the presence of double-sided moral hazard. In this scenario, we show that the venture capitalist's share is binding and, therefore, there is no efficiency wage. We simulate the model and show that the entrepreneur's effort does not monotonically decrease in the share allocated to the venture capital, while the venture capitalist's effort does not monotonically increase in his share. We show that as efforts tend to be more complementary, the project cash flows are distributed nearly equally, at approximately 50% for each partner. This theoretical finding is actually observed in real contracts between entrepreneurs and venture capitalists. (C) 2016 Elsevier B.V. All rights reserve

The authors revisit the evidence presented in Martinez et al. using new data and estimation techniques that take into account unobserved firm heterogeneity. The results of the earlier study are found to be robust to the new procedures because performance of family-controlled firms continues to be superior to that of nonfamily firms. The authors then add the risk dimension to the earlier analysis using a risk-adjusted return on assets (ROA) variable, and family-controlled firms again performed better. A test of the standard deviations of ROA for both firm categories revealed that family-controlled firms not only perform better but also show less volatility in their returns.

We use the Hinich portmanteau bicorrelation test to detect for the adequacy of using GARCH (Generalized Autoregressive Conditional Heteroscedasticity) as the data-generating process to model conditional volatility of stock market index rates of return in 13 emerging economies. We find that a GARCH formulation or any of its variants fail to provide an adequate characterization for the underlying process of the 13 emerging stock market indices. We also study whether there exist evidence of ARCH effects, over windows of 200, 400 and 800 observations, using Engle's LM (Lagrange Multiplier) test, and find that there exist long periods of time with no evidence of ARCH effects. The results suggest that policymakers should use caution when using autoregressive models for policy analysis and forecast because the inadequacy of GARCH models has strong implications for the pricing of stock index options, portfolio selection and risk management. Specially, measures of spillover effects and output volatility may not be accurate when using GARCH models to evaluate economic policy.

No abstract