||Hopenhayn, Hugo Andres. and Vereshchagina, Galina.
||Advances in dynamic economics
||Entrepreneurs bear substantial risk, but empirical evidence shows no sign of a positive premium. This paper develops a theory of endogenous entrepreneurial risk taking that explains why self-financed entrepreneurs may find it optimal to invest into risky projects offering no risk premium. The model has also a number of implications for firm dynamics supported by empirical evidence, such as a positive correlation between survival, size, and firm age.
||Risk taking, Intertemporal firm choice, Firm dynamics, Financing, Investment, Occupational choice, and Borrowing constraints
||G32 - Corporate finance and governance - Financing policy ; Financial risk and risk management ; Capital and ownership structure, L25 - Firm objectives, organization, and behavior - Firm performance : Size, diversification, and scope, L26 - Firm objectives, organization, and behavior - Entrepreneurship, and E21 - Macroeconomics : Consumption, saving, production, employment, and investment - Consumption ; Saving ; Wealth