I offer insights into publishing as Managing Editor-in-Chief of the Journal of Corporate Finance as it passes its 25th anniversary. The publishing tips are presented with a view towards guiding future authors. Also, I provide an intermediation perspective to publishing to further guide future authors, explaining the role of the publisher alongside the editors in the review process.

Prior research has argued that convertible preferred equity is the optimal form of venture capital (VC) finance, based on datasets with up to 213 observations from the United States, where unique tax biases exist in favor of convertible preferred. This paper introduces a comparable sample of 3083 Canadian corporate and limited partnership venture financing transactions spanning the years 1991–2000. The data indicate that a variety of securities are used, and convertible preferred equity has not been the most frequent. Empirical tests offer strong support for the proposition that the mix of financing instruments minimizes the costs arising from a set of agency problems.

We provide evidence of a significant relation between diversification and performance in the hedge fund industry. Measuring diversification across four distinct dimensions, we find a significant positive relation between hedge fund performance and diversification across sectors and asset classes. We show that on a risk adjusted basis, hedge funds that diversify across sectors and asset classes outperform other funds by an average of 1.1% per year. However, diversification across styles and geographies exhibits a significant negative association with hedge fund returns. Funds that diversify across styles and geographies underperform other funds by an average of 1% per year. For fund of hedge funds, we find a significant positive relation between performance and diversification across sectors. However, diversifying across asset classes and geographies is found to exhibit a negative relation with fund performance. Finally, we find that the motive to engage in diversification is consistent with managerial incentive structure in the hedge fund industry.

This paper considers the issue of when venture capitalists (VCs) make a partial, as opposed to a full exit, for the full range of exit vehicles. A full exit for an initial public offerings (IPO) involves a sale of all of the venture capitalist’s holdings within one year of the IPO; a partial exit involves sale of only part of the venture capitalist’s holdings within that period. A full acquisition exit involves the sale of the entire firm for cash; in a partial acquisition exit, the venture capitalist receives (often illiquid) shares in the acquiror firm instead of cash. In the case of a buyback exit (in which the entrepreneur buys out the venture capitalist) or a secondary sale, a partial exit entails a sale of only part of the venture capitalist’s holdings. A partial write-off involves a write down of the investment. We consider the determinants of full and partial venture capital exits for all five exit vehicles. We also perform a number of comparative empirical tests on samples of full and partial exits derived from a survey of Canadian and US venture capital firms. The data offer support to the central hypothesis of the paper: that the greater the degree of information asymmetry between the selling VC and the buyer, the greater the likelihood of a partial exit to signal quality. The data also indicate differences between the US and Canadian venture capital industries, and highlight the impact of legal and institutional factors on exits across countries.

We overview the papers of this special issue of the Journal of Corporate Finance and explain how they fit within the different segments of the entrepreneurial finance literature, including equity crowdfunding, angel investors, debt, venture capital, and private equity. We point to the growing importance of different sources of capital for entrepreneurs and emerging research trends pertinent to academics, practitioners, and policymakers. We explain common questions and suggest scope in future work for combining segments.

Delaware hedge funds exhibit significant differences in contractual structure in terms of higher management and incentive fees. Delaware funds are more likely to use high watermark provisions and less likely to invest their personal capital. Both the redemption notice periods and lock up periods are significantly longer for Delaware hedge funds. While Delaware hedge funds do not outperform or underperform funds registered elsewhere, fund flows are more sensitive to Delaware funds' prior performance and Delaware funds are more likely to be liquidated due to poor performance. Further, Delaware funds are more likely to increase risk after poor absolute performance.

We examine the impact of stock exchange trading rules and surveillance on the frequency and severity of suspected insider trading cases in 22 stock exchanges around the world over the period January 2003 through June 2011. Using new indices for market manipulation, insider trading, and broker–agency conflict based on the specific provisions of the trading rules of each stock exchange, along with surveillance to detect non-compliance with such rules, we show that more detailed exchange trading rules and surveillance over time and across markets significantly reduce the number of suspected cases, but increase the profits per suspected case.

This study empirically examines the effects of a regulation change on the structure and governance of leveraged buyouts (LBOs) within the Italian private equity market, whose transactions were only recently legalized. With a new data set covering approximately 85% of the buyout funds active in Italy during the period of 1999–2006, we find that a regulation that prohibits LBOs can reduce their frequency, but does not exclude them altogether. Rather, it inhibits efficient governance and distorts decision making. Overall, the data are consistent with the view that laws prohibiting LBOs result in less efficient LBO arrangements.