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Why are Buyouts Leveraged? The Financial Structure of Private Equity Firms

Axelson, Ulf; Strömberg, Per Johan; Weisbach, Michael - C.E.P.R. Discussion Papers - 2007

This paper presents a model of the financial structure of private equity firms. In the model, the general partner of the firm encounters a sequence of deals over time where the exact quality of each deal cannot be credibly communicated to investors. We show that the optimal financing arrangement...

Persistent link: https://www.econbiz.de/10005661723

Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts

Axelson, Ulf; Jenkinson, Tim; Strömberg, Per Johan; … - C.E.P.R. Discussion Papers - 2012

theories -- that drive public firm leverage. Instead, variation in economy-wide credit conditions is the main determinant of … prices and lower buyout fund returns, suggesting that acquirers overpay when access to credit is easier. …

Persistent link: https://www.econbiz.de/10011083386

IPO Pricing in the dot-com Bubble

Ljungqvist, Alexander P.; Wilhelm Jr, William J - C.E.P.R. Discussion Papers - 2002

IPO initial returns reached astronomical levels during 1999-2000. We show that the regime shift in initial returns and other elements of pricing behaviour can be at least partially accounted for by a variety of marked changes in pre-IPO ownership structure and insider selling behaviour over the...

Persistent link: https://www.econbiz.de/10005504679

Entrepreneurship in Equilibrium

Gromb, Denis; Scharfstein, David - C.E.P.R. Discussion Papers - 2002

This Paper compares the financing of new ventures in start-ups (entrepreneurship) and in established firms (intrapreneurship). Intrapreneurship allows established firms to use information on failed intrapreneurs to redeploy them into other jobs. Instead, failed entrepreneurs must seek other jobs...

Persistent link: https://www.econbiz.de/10005789057

Conflict of Interest in Universal Banking: Bank Lending, Stock Underwriting, and Fund Management

Ber, Hedva; Yafeh, Yishay; Yosha, Oved - C.E.P.R. Discussion Papers - 2000

Using a newly-constructed data set on Israeli Initial Public Offering (IPO) firms in the 1990s, we study costs and benefits of universal banking. We find that a firm whose equity was underwritten by a bank-affiliated underwriter, when the same bank was also a large creditor of the firm in the...

Persistent link: https://www.econbiz.de/10005791310

Evidence of Information Spillovers in the Production of Investment Banking Services

Benveniste, Lawrence M; Ljungqvist, Alexander P.; … - C.E.P.R. Discussion Papers - 2001

We present evidence that firms attempting IPOs learn from the experience of their contemporaries. These information spillovers affect revisions in offer terms and the decision whether to carry through with an offering. The evidence also supports the argument that IPOs are implicitly bundled as a...

Persistent link: https://www.econbiz.de/10005791488

Bookbuilding: How Informative is the Order Book?

Cornelli, Francesca; Goldreich, David - C.E.P.R. Discussion Papers - 2001

When using a formal bookbuilding procedure, underwriters observe the demand curves of investors as stated in the ‘book’ prior to pricing shares in an equity issue. The purpose of this Paper is to examine whether the investment bank uses the information in the book when setting the issue...

Persistent link: https://www.econbiz.de/10005791587

Venture Capital Finance: A Security Design Approach

Repullo, Rafael; Suarez, Javier - C.E.P.R. Discussion Papers - 1999

This paper provides a theory of venture capital financing based on the complementarity between the financing and …

Persistent link: https://www.econbiz.de/10005792071

Credit Ratings as Coordination Mechanism

Boot, Arnoud W A; Milbourn, Todd - C.E.P.R. Discussion Papers - 2002

In this Paper, we provide a novel rationale for credit ratings. The rationale that we propose is that credit ratings … can serve as a coordinating mechanism in situations where multiple equilibria can obtain. We show that credit ratings … relationship between a credit rating agency and a firm. Credit ratings can help fix the desired equilibrium and as such play an …

Persistent link: https://www.econbiz.de/10005504472

Venture Capital Financing: The Role of Bargaining Power and the Evolution of Informational Asymmetry

Koskinen, Yrjö; Rebello, Michael; Wang, Jun - C.E.P.R. Discussion Papers - 2006

We model a situation where the entrepreneur has an informational advantage during the early stages of an investment project while the venture capitalist has the informational advantage during the later stages. We examine how this evolution of informational asymmetry affects venture investment...

Persistent link: https://www.econbiz.de/10005067345