Aaron Levie, one of the founders of the Internet file-sharing site Box, Inc. explained the difficulty the

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Aaron Levie, one of the founders of the Internet file-sharing site Box, Inc. explained the difficulty the firm had in raising funds from investors: “Investors had a hard time investing in a company where the founders acted 40, were 19 and looked 12. They thought we’d run off to Disneyland with the funding money.” What do economists call the problem Levie encountered? Is the problem likely to be greater for small startup firms or for larger established firms? Briefly explain.

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Money, Banking, and the Financial System

ISBN: 978-0134524061

3rd edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

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