Firm value and the choice of offering method in initial public offerings

Article Abstract:

A firm raising capital in an initial public offering faces the problems of choosing between a firm-commitment and a best-efforts offering and of how to convey information about its value to potential investors. The offering method chosen is both the firm's cost of obtaining capital and investors' perceptions about firm value. A partially pooling, partially separating equilibrium is found where high-valued firms have information about their values revealed in a firm-commitment offering, while low-valued firms use best-efforts offerings and are unable to distinguish themselves from other firms. (Reprinted by permission of the publisher.)

Research, Stocks, Valuation

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Financing and advising: optimal financial contracts with venture capitalists

Article Abstract:

The article analyzes joint effort provision by an advisor and by an entrepreneur to improve an investment projectEs productivity. Investors are found to be value enhancing, like venture capitalists.

France, Management dynamics, Investment advice, Investment Advisory Services, Influence, Investment advisers, Company business management, Businesspeople, Entrepreneurship, Entrepreneurs

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