Corporate Finance Commons^™

Public Target Selection And Family Firms, Ezgi H. Ottolenghi

The Journal of Entrepreneurial Finance

We examine the relation between ownership structure and M&A target selection when family firms pursue public firm acquisitions. We find that family firm acquirers select targets that have lower Tobin’s Q relative to non-family acquirers. Our results suggest that family firms choose to acquire less glamorous targets against which they can better negotiate. The market reacts more positively to these family firm acquisitions at announcement and out to one year. It is family firm target selection skill along with negotiation skill that leads to the favorable market reception.

2023 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

2022 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

Employee-Friendly Practices And Innovation, Saeyoung Chang, Hoje Jo, Jo-Ellen Pozner

The Journal of Entrepreneurial Finance

We examine the inter-relationships among employee-friendly policies (EFP), innovation through R&D investment, and firm value. We hypothesize that firms with higher levels of innovation and entrepreneurial spirit are more likely to utilize EFP. Furthermore, we speculate that the value-EFP association is more pronounced in firms with high R&D intensity. Consistent with these assertions, we find that EFP is significantly and positively related to R&D investment and the number of patents. EFP is also associated with increased firm value at high levels of R&D investment and high numbers of patents. Furthermore, we find that firms investing more in R&D are more …

When The Social Networks And Internet Come To The Rescue Of Entrepreneurs: The Problematic Of Crowdfunding In Africa, Omenguele Rene Guy, Mbouolang Yimpi Cedric

The Journal of Entrepreneurial Finance

Since 2007, crowdfunding platforms have abounded on the web. It is estimated at 2.5 billion dollars the potential of the crowdfunding market in sub-Saharan Africa by 2025. The objective of this paper is to make an inventory of Crowdfunding activities in Africa, region with a most restrictive access to bank loan by SMEs, start-ups and young entrepreneurs. It appears from the economic and socio-cultural realities that Africa is a region with more potential catalyst for crowdfunding industry takeoff. However, there are many factors which are presented in this study as potential inhibitors of African CF market competiveness. This study has …

Islamic Profit And Loss Sharing Contracting Versus Regular Equity In Entrepreneurial Finance: Risk Sharing And Managerial Incentives, Abdulali Hadizada, Peter Nippel

The Journal of Entrepreneurial Finance

An entrepreneur shares business risk with the investors providing capital for her firm. Risk sharing is per se beneficial, but also results in an agency problem from diminished incentives for the entrepreneur. This classical trade-off depends on the financial contracting between the entrepreneur and the financier. As an alternative to debt or equity, we consider musharaka financing, an Islamic profit and loss sharing contract. First, we show that debt is inferior to equity or musharaka even though debt financing ensures first best efforts in our model. Whether financing with equity or by use of musharaka results in higher utility for …

2021 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

Ownership Concentration Dynamic Trade Off Theory And Debt Funding Of Business Start-Up, Hedia Fourati

The Journal of Entrepreneurial Finance

This paper examines the dynamics of financial in presence of ownership concentration of newly created firms. Our objective is to test the empirical role of the trade-off theory to explain the financial behaviour of business start-up. We use a sample of 114 business start-ups and we use the panel data estimation over the period 2006-2010. Our results show that start-up firms adjust slowly to target ratio for first years of operation. Ownership dispersion accelerates adjustment to debt funding. Asset tangibility remains the main determinants of debts funding for business start-up.

The Impact Of Competition From Venture Capitalists On Corporate Venturing Investment, Marco Bade

The Journal of Entrepreneurial Finance

This study proposes a model on corporate venturing (CV) investment and examines the impact of venture capital (VC) activity in the economy on CV firms’ investment. The presence of VCs creates competition for entrepreneurs. This reduces CV firms’ expected venturing returns, and thus gives rise to a financial disincentive to CV investment. The empirical prediction of this result is that competition for talent should decrease CV investment. This prediction contradicts previous statements in the theoretical literature on CV.

House Banks In Out-Of-Court Reorganization: Evidence From Austria, Stefan Mayr, Christine Duller, Kerstin Stumbauer

The Journal of Entrepreneurial Finance

The main purpose of this article is to study the role of house banks in out-of-court reorganization. Banks are traditionally one of the most important financial resources for firms. Especially in financially difficult times like those we now face due to the coronavirus, it can make a difference whether a bank supports its clients and accompanies firms through a crisis or not. With the help of relationship lending theory, we review the existing literature on this topic. Next, based on empirical findings from Austrian banks, we derive implications for corporate practice. The empirical study covers a sample of 658 firm …

2020 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

Hot Or Not – Which Features Make Fintechs Attractive For Investors?, Johannes Klein, Leonard Stuckenborg, Jens Leker

The Journal of Entrepreneurial Finance

Attracting investors and generating funding is a key issue for all start-ups. The information asymmetries between investor and start-up need to be reduced. Despite the overwhelming literature on venture capital financing and different signals reflecting venture quality, pinpointing the signals which impact funding decisions remains an open issue. This study presents an empirical examination of the effectiveness of different signals to convince investors and generate funding. We examine the impact of signals concerning venture quality (classic ones such as human capital, intellectual capital and social alliance/network capital as well as the strategic orientation in terms of business model patterns. Based …

Microfinance Institutions’ Criteria On Small Business Financing In Cameroon, Serge Messomo Elle

The Journal of Entrepreneurial Finance

This study uses MFIs as a unit of analysis to examine the factors of human, financial and social capital that increase the financing of microenterprises’ identification of opportunities and exploitation in Cameroon .To attain this objective, a questionnaire was used to collect data from 207 MFIs and analyzed using descriptive and multiple linear regression models. The results revealed that when it concerns the financing of opportunity identification, only human capital variables of Prior knowledge and Business training increase the financing of microenterprises by MFIs in Cameroon. Regarding the opportunity exploitation on the contrary, accumulated business knowledge, business skills and customer …

The Relationship Between Investment And Internal Cash Flows In Vc-Backed Smes: Does Firm Size Matter?, Zélia Silva Serrasqueiro, Filipe Sardo, Elisabete Félix

The Journal of Entrepreneurial Finance

Using panel data models and two research sub-samples composed of smaller and larger VC-backed, this study seeks to analyze the relationship between investment and internal cash flows. The results indicate that the investment sensitivity to internal cash flows is greater in larger than in the smaller VC-backed SMEs.

Debt is more important for smaller than for larger VC-backed SME investment. The moderation effect of VC ownership reduces the magnitudes of the positive impact of cash flows and debt as well as the negative effect of growth opportunities on investment in both smaller and larger VC-backed SMEs.

2019 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

Strategic Alliances Between Banks And Fintechs For Digital Innovation: Motives To Collaborate And Types Of Interaction, Milan Frederik Klus, Todor Stefan Lohwasser, Friedrich Holotiuk, Jürgen Moormann

The Journal of Entrepreneurial Finance

In times of digitalization, established firms operating in the financial services sector increasingly form alliances with start-up companies to satisfy the customers´ demand for rapid innovation and cope with the growing dynamics of markets. Technology-enabled innovation challenges traditional business models of incumbent institutions (e.g., banks) and requires them to adapt swiftly to the needs of the digital age. However, young firms providing technological solutions for the financial services industry (fintechs) also face difficulties, such as meeting regulatory requirements and winning the trust of potential customers. To compensate for these shortcomings and to exploit synergies, banks and fintechs are increasingly pooling …

The Promised Land Is On The Horizon: The Fix Crowdfunding Act Will Implement Small Changes That Could Make A Big Impact On Investors And Businesses Alike, Michaela Smith

The Journal of Business, Entrepreneurship & the Law

No abstract provided.

Implementing A Portable Reciprocity Passport To Crowdfund Real Estate Across Borders, Raymond Tran

The Journal of Business, Entrepreneurship & the Law

No abstract provided.

Failed Anti-Activist Legislation: The Curious Case Of The Brokaw Act, Alon Brav, J.B. Heaton, Jonathan Zandberg

The Journal of Business, Entrepreneurship & the Law

The Brokaw Act was proposed legislation aimed at “financial abuses being carried out by activist hedge funds who promote short-term gains at the expense of long-term growth . . . .” Sponsoring Senators named it after a small town in Wisconsin that, according to the Act’s sponsors, was decimated by the actions of a hedge fund activist in shutting down the local paper mill with a loss of hundreds of jobs. The Brokaw Act represented the first attempt at federal legislation aimed at restricting hedge fund activism. Since then, new and similar bipartisan proposals have appeared as have threats of …

2018 Q4 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Assessing The Value Of Ventures: Crowd Investors Vs. Sophisticated Investors, Marco Bade

The Journal of Entrepreneurial Finance

Recent regulatory approaches in crowdfunding democratize capital markets. Adverse wealth effects may arise because of information asymmetry. Firoozi et al. (2017) argue that crowdfunding has wealth-reducing effects on crowd investors because they systematically assign less value to good ventures, and more to bad ventures. This paper aims to take a more differentiated perspective by incorporating two dimensions of uncertainty determining ventures’ value. It further takes into account that different investor types learn different information. This yields new findings concerning the assessment of venture value by crowd investors and sophisticated investors. Crowd investors’ may be able to better assess venture value, …

2018 Q3 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

2018 Q2 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

2018 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

2018 Q1 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Duratable Enterprises Inc., Spencer D. Evans, Hal B. Heaton

The Journal of Entrepreneurial Finance

In late 2017, DuraTable received a number of unsolicited inquiries regarding its interest in selling out in a going private transaction, mostly from private equity firms. Since the chairman of the board and founder, Gary Reynolds, was approaching retirement age and the largest single shareholder who had provided the seed capital to start the company was over 80 years old, Mr. Reynolds was willing to consider a sale and provided information to four or five of them to prepare bids. DuraTable was a closely held company with relatively few individuals holding the vast majority of shares. As such, DuraTable’s shares …

2017 Q4 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Profitability Ratios In The Early Stages Of A Startup, Erkki K. Laitinen

The Journal of Entrepreneurial Finance

This study develops a mathematical framework to analyze the time series of profitability ratios in the early stages of a startup. It is assumed that the expenditure of the startup grows at a steady rate and generates a proportionally identical flow of revenue in each period. The profitability in terms of the internal rate of return (IRR) and the lag structure of revenue flows are assumed constant over time in describing the adjustment process towards the steady state. The startup is assumed to expense in each period a constant part of periodic expenditure and beginning-of-the-period assets. The adjustment processes of …

2017 Q3 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

2017 Q2 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.