Optimal financing for R􀓕D-intensive firms

Richard T. Thakor and Andrew W. Lo

We develop a theory of optimal financing for R&D-intensive firms. With only market financing, the firm relies exclusively on equity financing and carries excess cash, but underinvests in R&D. We use mechanism design to examine how intermediated financing can attentuate this underinvestment. The mechanism combines equity with put options such that investors insure firms against R&D failure and firms insure investors against high R&D payoffs not being realized

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Year of publication:	September, 2017 ; This draft: September, 2017
Authors:	Thakor, Richard T. ; Lo, Andrew W.
Publisher:	[Cambridge, MA] : MIT Sloan School of Management
Subject:	Theorie \| Theory \| Fremdkapital \| Debt financing \| Kapitalstruktur \| Capital structure

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Extent:	1 Online-Ressource (circa 62 Seiten) Illustrationen
Series:	Sloan working papers. - Cambridge, Mass. : [Verlag nicht ermittelbar], ZDB-ID 2446924-5. - Vol. 5240 (17) MIT Sloan Research Paper ; No. 5240-17
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Other identifiers:	10.2139/ssrn.3034428 [DOI]
Classification:	D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; G31 - Capital Budgeting; Investment Policy ; G32 - Financing Policy; Capital and Ownership Structure ; G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; O31 - Innovation and Invention: Processes and Incentives ; O32 - Management of Technological Innovation and R&D
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011749390