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Articles 1 - 23 of 23
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Letter From The Editors, Allan Young
Letter From The Editors, Allan Young
The Journal of Entrepreneurial Finance
The Journal of Entrepreneurial Finance and Business Ventures seeks to extend the focus of its predecessor, The Journal of Entrepreneurial Finance, to emphasize the multidisciplinary nature of entrepreneurship. Accordingly, The Journal of Entrepreneurial Finance and Business Ventures seeks submissions from all areas which focus on entrepreneurship. Our breadth extends both to the practical and the theoretical foundations of the field. We plan to publish both discursive and empirical treatments as well as instructionally oriented issues.
Venture Capital Finance In China, Xiaoqing Eleanor Xu
Venture Capital Finance In China, Xiaoqing Eleanor Xu
The Journal of Entrepreneurial Finance
The globalization of capital flow has resulted in an increasing number of firms choosing to cross-list their stocks in foreign stock exchanges to raise public equity capital abroad, and more recently, the booming of venture capital (VC) inflow to developing nations to finance the start-ups and growth companies in those emerging economies. The dramatic rise in venture-funded activity in developing nations has been largely fueled by institutional investors in the United States and other developed nations. Among the developing nations, China, in the transition from a central planning regulated economy to a free market economy, has progressed quickly in grasping …
Small Firm Use Of Debt: An Examination Of The Smallest Small Firms, Susan Coleman
Small Firm Use Of Debt: An Examination Of The Smallest Small Firms, Susan Coleman
The Journal of Entrepreneurial Finance
Access to capital is an on-going challenge for small firms. Capital is required to address a broad range of needs: to cover start-up costs, to provide working capital, to secure facilities or equipment, and to hire employees. Most small firms are at a relative disadvantage, because they are too small to access the public debt and equity markets. Similarly, they are typically too small to show up on the radar screens of venture capitalists on patrol for the next potential hot IPO. Alternatively, very small firms are heavily reliant on bank loans, trade credit, and informal sources of capital including …
The Internet, Bank Structure And Small Business Lending, Steven G. Craig, Polly T. Hardee
The Internet, Bank Structure And Small Business Lending, Steven G. Craig, Polly T. Hardee
The Journal of Entrepreneurial Finance
The advent of the Internet has opened many opportunities for bankers to access new customers, increase convenience and expand product ranges in many markets, including that of small businesses. Yet anecdotal evidence reveals that smaller banks are reluctant to employ Internet technology in the small business market for fear of damaging the customer relationship developed through personal contact. These smaller, more simply structured banks tend to specialize in small business lending, possessing a comparative advantage in that market (Craig and Hardee, 2001). This is particularly so in relationship driven credits where personal knowledge of the borrower is paramount over financial …
Letter From Guest Editor Yochanan Shachmurove, Yochanan Shachmurove
Letter From Guest Editor Yochanan Shachmurove, Yochanan Shachmurove
The Journal of Entrepreneurial Finance
At the heart of entrepreneurship is small business creation. Small business ownership is an accessible means for economic independence and self-fulfillment of one’s expectations. Small business entrepreneurs capitalize on their human capital and willingness to work long and hard to improve their quality of life. They often struggle to establish sustainable businesses that may one day become legacies for them and for their children. Entrepreneurship plays an international role as well. Successful entrepreneurs expand a nation’s economy. Countries compete for entrepreneurs by creating an inviting atmosphere and using beneficial laws and plentiful opportunities, such as emerging markets. Countries used to …
Entrepreneurship, Innovation And Growth: The David-Goliath Symbiosis, William J. Baumol
Entrepreneurship, Innovation And Growth: The David-Goliath Symbiosis, William J. Baumol
The Journal of Entrepreneurial Finance
Investment in innovation in industrialized economies increasingly is taken over by large firms that operate their own R&D divisions and transform technological change into a routine bureaucratized process. Powerful competitive forces require firms to do this for survival. But such routinized innovation has not replaced the individual independent innovator, the traditional source of technical change. The latter have tended to provide the more revolutionary breakthroughs, to which corporate research has added reliability, enhanced power and ease of utilization. Thus, both make a vital contribution to growth. While the results of big business research are often less spectacular, they have typically …
Price Bubbles Of New-Technology Ipos, Haim Kedar-Levy
Price Bubbles Of New-Technology Ipos, Haim Kedar-Levy
The Journal of Entrepreneurial Finance
Asset pricing models with atomistic agents typically relax assumptions concerning rationality and/or homogenous information in order to track endogenous bubbles. In this model, identically informed rational agents hold a Perceived Law of Motion (PLM) for a single new technology asset at IPO, yet they differ with respect to risk aversion. By mapping risk preferences to strategies, we use marginal supply and demand functions to solve for the PLM if REE holds. By relaxing the assumption of complete knowledge of agent's tastes and wealth, post-IPO bubbles emerge where the Actual Law of Motion is an amplification (bubble) of the price processes …
Collegiate Athletic Directors As Entrepreneurs, Michael A. Leeds
Collegiate Athletic Directors As Entrepreneurs, Michael A. Leeds
The Journal of Entrepreneurial Finance
One can define entrepreneurship, at its most basic level, as rent-seeking behavior. This behavior can be productive, as when firms innovate to create new or better products or when they enter a market to increase output where price exceeds marginal cost. Rent-seeking can also be unproductive, particularly when it interfaces with the public sector. In such cases, firms may try to create or preserve rents by securing monopoly power from the government. Traditionally, economists have analyzed rent-seeking behavior solely in the private and government sectors of the economy. I extend the concept to the not-for-profit sector, in particular to the …
Small Business Financing: Differences Between Young And Old Firms, Alicia M. Robb
Small Business Financing: Differences Between Young And Old Firms, Alicia M. Robb
The Journal of Entrepreneurial Finance
Financial capital is necessary not only for business formation but also for business survival and expansion: its role is well documented in the literature. While venture capital and IPOs often make the popular press, the fact is most firms are unable to tap into this market. Instead, they depend on owner equity, other private equity, and debt financing. Survey data from the Federal Reserve Board allow an in depth look at the patterns of small business financing in the late nineties. Evidence suggests that debt financing for small businesses was extremely important, especially for young firms.
Optimal Liquidation Of Venture Capital Stakes, Robert Dubil
Optimal Liquidation Of Venture Capital Stakes, Robert Dubil
The Journal of Entrepreneurial Finance
We model the optimal liquidation behavior of a venture capital or non-diversified asset management firm faced with a sale of concentrated security holdings. As the firm?s stake is large, its sales can lead to permanent and temporary price depressions. At the optimum, the institution chooses the liquidation interval to balance the exposure to the market return variance against the impact of its own sales on the realized return. We obtain closed-form solutions for power impact functions uncorrelated with returns. We also consider market impact correlated with the return process, i.e. a case where liquidity evaporates during severe price dislocations.
Why New Ventures Grant Employee-Stock-Options, Elli Kraizberg, Vassilios N. Gargalas
Why New Ventures Grant Employee-Stock-Options, Elli Kraizberg, Vassilios N. Gargalas
The Journal of Entrepreneurial Finance
As of 1998, nine percent of the shares of all firms in the US, primarily young and small ones, have been owned, essentially by about 17 million employees. The recent trend of new ventures to grant company-wide stock options plans is an alignment of the interests of management, shareholders, and non-managerial employees. This paper empirically explores the hypothesis that company-wide stock options plans primarily serve the interests of the firm?s management. This is true, whether or not, management owns a stake in the firm?s equity, though the degree of his or her motivation varies depending on the size of his/her …
Subchapter S, An Entrepreneurial Survival Strategy For Small Banks, Steven G. Craig, Polly T. Hardee
Subchapter S, An Entrepreneurial Survival Strategy For Small Banks, Steven G. Craig, Polly T. Hardee
The Journal of Entrepreneurial Finance
With the passage of the Small Business Job Protection Act of 1996, many small banks throughout the United States became eligible to reorganize as a Subchapter S corporation. This allows these banks to eliminate double taxation, and increase shareholder value. Consequently, employing this entrepreneurial survival tool extends “new life†to the small bank. Accompanying this strategy are differences in corporate governance, primarily more concentration of ownership. Thus, this paper examines the behavior of Subchapter S banks as compared to banks of similar size in order to determine significant performance differences. It also focuses on bank structure and small business lending …
Consumer Behavior Under The Influence Of Terrorism Within The United States, Lawrence R. Klein, Suleyman Ozmucur
Consumer Behavior Under The Influence Of Terrorism Within The United States, Lawrence R. Klein, Suleyman Ozmucur
The Journal of Entrepreneurial Finance
Many indicators are helpful in improving statistical performance for forecasting and policy analysis. We do believe, however, no single indicator (or type of indicator) can do the necessary work by itself. Any new finding is likely to make a better contribution in combination with others that have been found to be useful. Timeliness, flexibility, and foresight are important properties of indicators, and we are especially interested in information that reflects subjective feelings of participants in the economy. Results of surveys covering consumers, producers or managers are useful in forecasting major macroeconomic variables, like personal consumption expenditures and personal income. Preliminary …
Entrepreneurship, Firm Size And The Structure Of The Italian Economy, Pellegrino Manfra
Entrepreneurship, Firm Size And The Structure Of The Italian Economy, Pellegrino Manfra
The Journal of Entrepreneurial Finance
Since World War II, Italy's economic growth has been one of the highest in the world. The objective of this study is to examine the structure of the Italian economy and causes of this growth. It was found that small and medium-sized firms, most of them family-owned, have been the dynamic force behind the country?s extraordinary economic performance. The vital role of the family and that of the entrepreneur – as the supreme spirit of enterprise and initiative - has been paramount in this process. Production by small and medium-sized firms have concentrated in a specific geographical area called “industrial …
Value Creation And The Entrepreneurial Business, Michael F. Spivey, Jeffrey J. Mcmillan
Value Creation And The Entrepreneurial Business, Michael F. Spivey, Jeffrey J. Mcmillan
The Journal of Entrepreneurial Finance
The need to finance high growth and manage the interests and needs of investors makes value creation a critical concern for entrepreneurial businesses. Almost any financial endeavor, such as attracting new investors or making investment decisions, necessitates the consideration of the equity value created by the endeavor. The perceived value creation, for example, has a direct effect on the percentage of the firm outside investors will require if they are to invest in the business. Measuring the value created by publicly traded businesses, depending on the assumptions made, is relatively straightforward. If public markets are at least semi-strong form efficient …
Inter-Firm Networking Propensity In Small And Medium-Sized Enterprises (Smes), Jean-Marie Nkongolo-Bakenda
Inter-Firm Networking Propensity In Small And Medium-Sized Enterprises (Smes), Jean-Marie Nkongolo-Bakenda
The Journal of Entrepreneurial Finance
In the past decade, market globalization has not only been a threat for small and medium-sized enterprises (SMEs), but also an opportunity to expand their activities in many countries (Murphy and al., 1991). In fact, some of SMEs are worldwide leaders in their sectors (Simon, 1990; Entreprise, 1995). Moreover, few of these worldwide SME leaders started businesses directly on an international level (Christensen, 1991; Brush, 1992; McDougall and al., 1994). This suggests that these SMEs use many processes to overcome resource and competency constraints, which would otherwise impede the success of a transnational business in the new global environment (Barlett …
Letter From Guest Editor Yochanan Shachmurove, Yochanan Shachmurove
Letter From Guest Editor Yochanan Shachmurove, Yochanan Shachmurove
The Journal of Entrepreneurial Finance
Whereas the last issue of the journal concentrated more on entrepreneurial finance, this issue presents a few studies concentrating on business ventures in the United States, the emerging Polish economy and the developed economy of Italy. Small firms are a powerful economic force in the economies of the United States, Italy and Poland. According to the United States Small Business Administration (SBA), small firms are defined as those having 500 or fewer employees. Firms of this size represent 99 percent of all firms in the U.S. These business ventures generate the majority of net new jobs and are a major …
Earnings In Poland: The Private Versus The Public Sector, Jacob Weisberg, Mieczslaw Waclaw Socha
Earnings In Poland: The Private Versus The Public Sector, Jacob Weisberg, Mieczslaw Waclaw Socha
The Journal of Entrepreneurial Finance
The transition of Poland to a free market economy, concurrent to a substantial increase of the private sector, promoted entrepreneurship, joint ventures, self-employment, labor reallocation, growth of financial markets and direct foreign investments. Previous studies have provided inconclusive evidence regarding earning disparities in Poland. The present study proposes a model that employs demographic, employment and organizational characteristics, revealing that earnings in the private sector are 9.8% higher than in the public sector; human capital characteristics are more influential in the private than in the public sector; the return to general training is higher for both workers with a higher education …
Some Potential Means For Venture Valuation, Wolfgang Stummer
Some Potential Means For Venture Valuation, Wolfgang Stummer
The Journal of Entrepreneurial Finance
In some modern venture valuation approaches, option pricing theory plays an important role. The aim of this paper is to present some tools and viewpoints which might be helpful for future investigations along this line. We model the value-dynamics Xt of an imbedded underlying X as a non-lognormally-distributed generalization of the geometric Brownian motion. In detail, Xt is supposed to be a solution of a stochastic differential equation of the form with non-constant volatility function ? (t) and Brownian motion Wt . For this, we discuss a certain decision problem concerning the size of the trend function b . Under …
New Bank Start-Ups: Entrepreneurs Funding Other Entrepreneurs, Robert Deyoung
New Bank Start-Ups: Entrepreneurs Funding Other Entrepreneurs, Robert Deyoung
The Journal of Entrepreneurial Finance
There has traditionally been a symbiotic link between new business ventures and new banking ventures. This article finds that the traditional link between small businesses and small banks – the small business loan – has weakened in recent years. While new banks have intensified their reliance on small business customers, small business borrowers have become less reliant on small banks for their credit needs. These findings are consistent with rapid changes in the structure of the banking industry, financial instruments and markets, and communications and information technology over the past two decades.
Borrowing Patterns For Small Firms: A Comparison By Race And Ethnicity, Susan Coleman
Borrowing Patterns For Small Firms: A Comparison By Race And Ethnicity, Susan Coleman
The Journal of Entrepreneurial Finance
This article explores the use of debt capital by small firms using data from the 1998 Survey of Small Business Finances. An examination of the data reveals differences in the characteristics and borrowing experience of small firms by race and ethnicity. Results indicate that although minority firm owners were just as likely to apply for loans, they were significantly less likely to be approved for them. Further, black small business owners were less likely to even bother applying for a loan, because they assumed they would be denied. These findings have implications for the ability of minority small business owners …
Who Are The Entrepreneurs? Evidence From Taxpayer Data, Donald Bruce, Douglas Holtz-Eakin
Who Are The Entrepreneurs? Evidence From Taxpayer Data, Donald Bruce, Douglas Holtz-Eakin
The Journal of Entrepreneurial Finance
The United States has experienced a revival of interest in entrepreneurs. While much of the public fascination has focused on "dot com" millionaires and similar high-profile phenomena, a coincident surge in research has focused on the economic foundations of this boom. In executing their research strategy, analysts are confronted with the interrelated issues of deciding "who is an entrepreneur" and identifying data sources suitable to analyze retrepreneurial behavior. In many instances, the focus has been on those individuals who identify themselves as self-employed in large cross-sectional data sets like the Census or Current Population Survey (CPS), or panel data sets …
Closely Held Firms As Going Concerns, Michael S. Long, Stephan E. Sefcik
Closely Held Firms As Going Concerns, Michael S. Long, Stephan E. Sefcik
The Journal of Entrepreneurial Finance
This current GAAP determination of a going concern is shortsighted for two important reasons. The most important deals with creditors and other stakeholders involved with the business. Do they enter into contracts with the business or with the individual owner/manager? Currently, they contract with both since, in reality, they make no determination whether a separate firm (entity) exists. The second deals with valuing a business. If the business is not really a separate going concern, it would typically be valued as the sum of its individual assets instead of the present value of its future cash flows. Many times when …