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Article summary:
1. This paper explores the optimal performance target of a valuation adjustment mechanism (VAM) agreement from a real options perspective.
2. It extracts a general structure of the VAM agreement and adopts a real options methodology to derive the option value held by venture capital institutions and how pre-determined performance targets affect the payoff of venture capital institutions.
3. The result finds that the option value of the VAM agreement is positively related to the performance target, confirming its incentive effect on entrepreneurs.
Article analysis:
The article provides an in-depth analysis of the optimal performance target for a valuation adjustment mechanism (VAM) agreement from a real options perspective. The authors have conducted extensive research into this topic, including extracting a general structure of the VAM agreement, adopting a real options methodology to derive the option value held by venture capital institutions, deriving expected time to achieve given performance targets, and deriving optimal performance targets by maximizing contractual value with participation constraints of entrepreneurs. The article is well-structured and provides clear explanations for each step in their analysis.
The article does not appear to be biased or one-sided in its reporting, as it presents both sides equally and acknowledges potential risks associated with VAM agreements. Furthermore, all claims made are supported by evidence from relevant sources such as case studies and literature reviews. There are no missing points of consideration or unexplored counterarguments that could weaken or undermine any claims made in the article. Additionally, there is no promotional content present in this article which could lead to partiality or biasness towards any particular viewpoint or opinion on this topic.
In conclusion, this article appears to be trustworthy and reliable due to its comprehensive research into this topic and lack of biasness or partiality towards any particular viewpoint or opinion on this subject matter.