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A Theory Of Outside Equity
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Book Synopsis A Theory of Outside Equity by : Spiros P. Bougheas
Download or read book A Theory of Outside Equity written by Spiros P. Bougheas and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the financial economics literature debt contracts provide efficient solutions for addressing managerial moral hazard problems. We analyze a model with multiple projects where the manager obtains private information about their quality after the contract with investors is agreed. The likelihood of success of each project depends on both its quality and the level of effort exerted on it by the manager. We find that, depending on the distribution of the quality shock, the optimal financial contract can be either debt or equity.
Book Synopsis The Optimality of Debt Versus Outside Equity by : Zsuzsanna Fluck
Download or read book The Optimality of Debt Versus Outside Equity written by Zsuzsanna Fluck and published by . This book was released on 2008 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a theory of outside equity based on the control rights and the maturity design of equity. We show that outside equity is a tacit agreement between investors and management supported by equityholders right to dismiss management regardless of performance and by the lack of a prespecified expiration date on equity. Furthermore, as a tacit agreement outside equity is sustainable despite management s potential for manipulating or diverting the cash flows and regardless of how costly it is for equityholders to establish a case against managerial wrongdoing. We establish that the only outside equity hat investors are willing to hold in equilibrium is outside equity with unlimited life, the very outside equity that corporations issues. Consistent with empirical evidence, this model predicts that debt-equity ratios will be higher in industries where cash flow variability is low relative to industries where cash flow variability is high. Furthermore, our theory implies that investors practice maturity- matching: they match the maturity of the optimal debt contract with the life of the physical assets and the maturity of the equity contract with the life of the company s real options.
Book Synopsis The Theory of Corporate Finance by : Jean Tirole
Download or read book The Theory of Corporate Finance written by Jean Tirole and published by Princeton University Press. This book was released on 2010-08-26 with total page 657 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Magnificent."—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.
Book Synopsis Optimal Financial Contracting by : Zsuzsanna Fluck
Download or read book Optimal Financial Contracting written by Zsuzsanna Fluck and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a theory of outside equity based on the control rights and the maturity design of equity. We show that outside equity is a tacit agreement between investors and management supported by equityholders' right to dismiss management regardless of performance and by the lack of a prespecified expiration date on equity. As a tacit agreement outside equity is sustainable despite management's potential for manipulating the cash flows and regardless of how costly it is for equity holders to establish a case against managerial wrongdoing. We establish that the only outside equity that investors are willing to hold in equilibrium is that with unlimited life, the very outside equity that corporations issue. Consistent with empirical evidence, this model predicts that debt-equity ratios are higher (lower) in industries withlow (high) cash flow variability.
Book Synopsis The Positive Theory of Capital by : Eugen von Böhm-Bawerk
Download or read book The Positive Theory of Capital written by Eugen von Böhm-Bawerk and published by Jazzybee Verlag. This book was released on 1891 with total page 476 pages. Available in PDF, EPUB and Kindle. Book excerpt: Von Boehm-Bawerk is one of the leading economists of the so-called Austrian school. With Karl Menger and others, he has contributed to the development of a theory of value which has received wide acceptance, and has been the cause of still wider discussion, in the economic world. This theory, as elaborated by Boehm von Bawerk, is based largely upon psychological principles. Its chief feature consists in a searching analysis of ‘subjective value.’ In his “Capital and Interest”, the author makes a brilliant and original study of these two subjects. “The Positive Theory of Capital” is the successor to the work mentioned above.
Book Synopsis A Theory of the Firm by : Michael C. Jensen
Download or read book A Theory of the Firm written by Michael C. Jensen and published by . This book was released on 2000-12-30 with total page 344 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection examines the forces, both internal and external, that lead corporations to behave efficiently and to create wealth. The author argues that control is vested in shareholders to maximise corporate value, risking the hostile takeovers which led to the economic boom of the 1990s.
Book Synopsis Debt and Outside Equity as Information Revelation Mechanisms by : Michel A. Habib
Download or read book Debt and Outside Equity as Information Revelation Mechanisms written by Michel A. Habib and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a unified theory of debt and outside equity based on specialized valuation of the corporate enterprise. We model the decision of an entrepreneur to use debt and equity finance to get credible information from different specialists about the value of the enterprise in various uses across alternative states of the world. The equity valuation specialist -- who could be a venture capitalist or another type of equity partner -- provides a price forecast for equity that reveals demand-side information about the value of the enterprise in the good sates. His equity share represents a claim on the cash flow generated by the enterprise in its primary use. The debt valuation specialist provides a price forecast for debt that reveals information about the value of the enterprise in the bad states. His loan represents a claim on the cash flow generated by the enterprise if redeployed to its next best use. The prices forecast for debt and equity by the valuation specialists credibly reveal their private information because the entrepreneur requires them to buy the associated claim at the forecast price, thereby bonding their valuations. In contrast to recent work on the role of debt and outside equity in communicating supply-side information to outside investors, we focus on the communication of demand-side information to the entrepreneur. We provide testable implications that conflict with those provided by accepted informational explanations for debt and outside inquiry.
Book Synopsis Outside-In Marketing by : James Mathewson
Download or read book Outside-In Marketing written by James Mathewson and published by IBM Press. This book was released on 2016-04-08 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: Supercharge ROI by Rebuilding Content Marketing Around Your Customer! Marketing has always been about my brand, my product, my company. That’s “inside-out” marketing. Today, customers hate it—and ignore it. What does work? Customized messages they already care about. Marketing that respects their time and gives them immediate value in exchange for their attention. Marketing that’s “outside-in.” Now, two renowned digital marketing thought leaders show how to integrate content marketing with Big Data to create high-ROI, outside-in marketing. James Mathewson and Mike Moran share new practices, techniques, guidelines, and metrics for engaging on your customers’ terms, using their words, reflecting their motivations. Whether you’re a content marketer, marketing executive, or analyst, you’ll learn how to: • Ease your customers’ pain—solve what keeps them up at night—with compelling content experiences • Build content that’s essential to clients and prospects in each step of their buyer journeys • Integrate search and social data into all facets of content development to continually improve its effectiveness • Build evergreen content that is continuously improved to better meet the needs of your clients and prospects • Apply advanced machine learning, text analytics, and sentiment analysis to craft more discoverable, shareable content • Shape your messages to intercept your clients’ and prospects’ information discovery in Google • Transform culture and systems to excel at outside-in marketing
Book Synopsis The Theory of the Firm by : Nicolai J. Foss
Download or read book The Theory of the Firm written by Nicolai J. Foss and published by Taylor & Francis. This book was released on 2000 with total page 488 pages. Available in PDF, EPUB and Kindle. Book excerpt: Includes over 60 classic papers, these volumes collect together contributions on the theory of the firm, beginning with Ronald Coase's classic work of 1937 and ending with important papers published as late as 1998.
Book Synopsis A Theory of Equity Carve-Outs and Negative Stub Values under Heterogeneous Beliefs by : Onur Bayar
Download or read book A Theory of Equity Carve-Outs and Negative Stub Values under Heterogeneous Beliefs written by Onur Bayar and published by . This book was released on 2015 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a theory of new project financing and equity carve-outs under heterogeneous beliefs among investors in the equity market. We consider a setting where an employee of a firm generates an idea for a new project that can be financed either by issuing equity against the future cash flows of the entire firm, i.e., both assets in place and the new project (quot;integrationquot;), or by undertaking an equity carve-out of the new project (quot;non-integrationquot;). The patent underlying the new project is owned by the firm. However, the employee generating the idea needs to be motivated to exert optimal effort for the project to be successful. The most important ingredient driving the firm's choice between integration and non-integration is heterogeneity in beliefs among outside investors (each of whom has limited wealth to invest in the equity market) and between firm insiders and outsiders. If outsider beliefs are such that the marginal outsider financing the new project is more optimistic about the prospects of the project than firm insiders, and this incremental optimism of the marginal outsider over firm insiders is greater regarding the new project than about the firm's assets in place, then the firm will implement the project under non-integration rather than integration. Two other ingredients driving the choice between integration and non-integration are the cost of motivating the employee to exert optimal effort for project implementation, and the synergy between the new project and the firm's assets in place, which is eliminated under non-integration. We derive a number of testable predictions regarding a firm's equilibrium choice between integration and non-integration. We also provide a rationale for the quot;negative stub valuesquot; documented in the equity carve-outs of certain firms (e.g., the carve-out of Palm from 3Com) and develop predictions for the magnitude of these stub values.
Download or read book Social Exchange written by Kenneth Gergen and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 402 pages. Available in PDF, EPUB and Kindle. Book excerpt: INTRODUCTION In developing scientific theory there is perhaps nothing more propi tious than a compelling metaphor. If the metaphor is rich in imagery, complexly differentiated, emotionally evocative, and vitally wedded to the cultural lore, the theory to which it gives rise may enjoy a long and vigorous life. If the metaphor is sufficiently powerful, the theory may even be sustained in independence of systematic empirical support. Role theory is likely to remain prosperous so long as there is a thriving theater; decision theory experienced a dramatic rejuvenation with the development of the electronic computer; and, in spite of its archaic construction, Jungian theory will prevail so long as ancient myths and symbols continue to haunt us (d. Smith, 1978). From this standpoint, the development of social exchange theory is hardly surprising. Ex perience with the marketplace is extensive in society, its images are both complex and richly evocative, its challenges are often exciting and its lessons sometimes painful. It is thus both intellectually and emo tionally invigorating to consider the social arena in all its diversity as an extended market in which each individual seeks to maximize profits. The economic metaphor is hardly new to the social sciences. The recent intellectual roots of contemporary exchange theory can be traced to the works of Claude Levi-Strauss, Marcel Mauss, Karl Marx, and B.
Download or read book Equity written by H. Peyton Young and published by Princeton University Press. This book was released on 1995-08-27 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: Governments and institutions, perhaps even more than markets, determine who gets what in our society. They make the crucial choices about who pays the taxes, who gets into college, who gets medical care, who gets drafted, where the hazardous waste dump is sited, and how much we pay for public services. Debate about these issues inevitably centers on the question of whether the solution is "fair." In this book, H. Peyton Young offers a systematic explanation of what we mean by fairness in distributing public resources and burdens, and applies the theory to actual cases.
Book Synopsis The Theory of Capital by : D C Hagued
Download or read book The Theory of Capital written by D C Hagued and published by Springer. This book was released on 1961-01-01 with total page 419 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Theory of Stock Exchange Speculation by : Arthur Crump
Download or read book The Theory of Stock Exchange Speculation written by Arthur Crump and published by . This book was released on 1887 with total page 164 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Financial Markets Theory by : Emilio Barucci
Download or read book Financial Markets Theory written by Emilio Barucci and published by Springer Science & Business Media. This book was released on 2002-12-11 with total page 488 pages. Available in PDF, EPUB and Kindle. Book excerpt: A presentation of classical asset pricing theory, this textbook is the only one to address the economic foundations of financial markets theory from a mathematically rigorous standpoint and to offer a self-contained critical discussion based on empirical results. Tools for understanding the economic analysis are provided, and mathematical models are presented in discrete time/finite state space for simplicity. Examples and exercises included.
Book Synopsis The Theory of the Firm by : Peter J. Curwen
Download or read book The Theory of the Firm written by Peter J. Curwen and published by Springer. This book was released on 1976-04-01 with total page 201 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Start-Up Financing by : Hans K. Hvide
Download or read book Start-Up Financing written by Hans K. Hvide and published by . This book was released on 2007 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the extent to which start-ups use outside equity, and interpret our results in relation to financial contracting theory. We do so by studying the start-up and founder characteristics that are associated with the use of outside equity financing, using a unique dataset from Norway. Our findings suggest that adverse selection are less of a concern for start-ups than ex-post opportunistic behavior (risk shifting) by the entrepreneur as in Myers (1977) and Ravid amp; Spiegler (1997). One implication of this finding is that outside equity and debt are complements rather than substitutes, and that an extra unit of equity financing has a multiplicative effect on total financing through releasing additional debt financing. We do not find convincing evidence that the use of outside equity has detrimental effects on entrepreneurial effort, nor that a possible shortage of available outside equity leads to investor monopolization and excessive investor returns. Thus we provide evidence that outside equity provides an important avenue for entrepreneurs to escape liquidity constraints.
