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Finance and Financial Management Commons™
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Full-Text Articles in Finance and Financial Management
Assessing The Value Of Ventures: Crowd Investors Vs. Sophisticated Investors, Marco Bade
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, …
Toward A Corporate Finance Theory For The Entrepreneurial Firm, James S. Ang
Toward A Corporate Finance Theory For The Entrepreneurial Firm, James S. Ang
The Journal of Entrepreneurial Finance
Corporate finance for the entrepreneurial firm is fundamentally different from that of the traditional firm. The standard problems and solutions to both investment and financing are reformulated in this paper. The formulation is intended to capture two distinguishing features of entrepreneurial finance: 1) Although new ventures yield negative returns on average, they are in aggregate welfare increasing for the economy, after considering their positive externalities. 2) Due to new ventures’ lack of consistent cash flows, which precludes the use of debt, the debt versus equity financing choice is replaced by the choice between the entrepreneurs’ desire for wealth versus control; …
Do Private Firms Benefit From Trading In The Private Securities Market?, Robert Loveland, Eric Fricke, Sinan Goktan
Do Private Firms Benefit From Trading In The Private Securities Market?, Robert Loveland, Eric Fricke, Sinan Goktan
The Journal of Entrepreneurial Finance
The trading of private securities has recently gained greater visibility and importance with the advent of organized, private security exchanges. This paper uses data on IPO firms that list on the SharesPost private securities exchange platform to examine the potential benefits of a listing. Specifically, we test whether a listing reduces IPO underpricing or enables liquidity provision to firm employees. Controlling for endogeneity, we find no evidence that a pre-IPO listing on SharesPost lessens IPO underpricing. However, we also find that SharesPost-listed companies are able to pay their employees less in cash and more in stock and stock options than …