Finance and Financial Management Commons^™

2017 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 …

2017 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.

Why Trade Credit Financing Is More Important Than Developing Large Customer Relationships For Video Game Suppliers, Jocelyn D. Evans, Dominique G. Outlaw

The Journal of Entrepreneurial Finance

Trade credit extended to suppliers in the video game industry does not serve as a commitment device for large customers in determining which vendors to make relationship-specific investments in. Suppliers of video games are better off investing in relationships with trade creditors than seeking out large customers. The costs of large customer relationships are lower sales growth and less long-term debt leverage. Also, large customers don’t form relationships with suppliers in this industry, which has high research and development expenditures nor do they facilitate economic viability with regard to continued independent operational performance or listing on a stock exchange.

The Evolution Of Financing Structure In U.S. Startups, Carmen Cotei, Joseph Farhat

The Journal of Entrepreneurial Finance

In this article we examine how startup businesses finance their operations over time. We employ the Latent growth modeling technique to test the financial growth cycle theory developed by Berger and Udell (1998). The data used in this study is the Kauffman Firm Survey, the largest longitudinal data set comprised of a random sample of U.S. startups launched in 2004 and surveyed annually through 2011. Consistent with the predictions of financial growth cycle theory, in the startup stage, entrepreneurs rely on initial insider capital sources such as personal savings, financing offered by friends and family, quasi-equity, and personal debt. Over …

Private Equity In Family Firms: Drivers Of The Willingness To Cede Control, Marisa Henn, Prof. Dr. Eva Lutz

The Journal of Entrepreneurial Finance

Our aim is to empirically examine how reasons for using private equity (PE) and prior experience with PE affect the willingness of privately held firms to cede company control. Based on a questionnaire entailing 75 privately held firms backed by PE, we show that family firms cede less control than non-family firms when entering a PE transaction. However, if firms seek funds due to challenges related to ownership changes, the difference between family firms and non-family firms decreases. Moreover, we find that family firms sell more company shares if they are run by a PE-experienced manager.

Returns To Tilapia Fish Farming In Ghana – Implications For Tilapia Pooled Investment Vehicles, Kwami Adanu, Mawufemor Adanu

The Journal of Entrepreneurial Finance

In Ghana, the private sector’s response to financing constraints associated with aquaculture investment has been to employ Pooled Investment Vehicles (PIVs). Unfortunately, several of these PIVs faced insolvency with huge losses to investors as returns promised investors turn out to be unrealizable. The premise of this study is that such insolvency problems occur mainly because of the lack of reliable data on likely returns and risk associated with Tilapia farm investments. This study improves on the “single value” profitability estimates of previous studies by performing Value at Risk (VaR) analyses on estimated farm-level returns, and 5,000 Monte Carlo simulation …

Risk Appetites And Empirical Survival Pattern Of Small And Medium Enterprises In Nigeria, Joshua S. Adeyele Dr., Osazee G. Omorokunwa Dr.

The Journal of Entrepreneurial Finance

ABSTRACT

Small and medium enterprises (SMEs) are vital to economic growth and development of a nation. However, many of them fail in the first five years of incorporation due to their exposures to risk financing and strategies employed to meet customers’ need during business shutdown. Hence, this study is designed to verify how SMEs’ risk financing affect their continuity, and to model their survival patterns in context of risk financing and risk management approach employed by the operators. Two hundred and nine copies of valid questionnaire distributed to the respondents were filled and returned. Cramer’s V and multiple regressions were …

Capital Markets Financing For Agricultural Business Development In Tanzania; A Case Of Cocoa Farming In Kyela And Rungwe Districts, Godfrey Frank Molela

The Journal of Entrepreneurial Finance

This study tries to explore the financing opportunity for smallholder cocoa farmers available at capital markets through enterprise growth market (EGM) financing window. The research findings from 122 cocoa farmers revealed that, in average a single cocoa farmer needed Tshs. 551,808.12 per acre as capital investment in a given season. At the time of data collection the cocoa prices at London and New York futures markets were Tshs. 6,266.75/Kg and Tshs. 6,148.62/Kg respectively at prevailed rates which were far above the production cost. In this case the envisaged gross margin was sufficient to service issuers’ interest of running their business …

Information Asymmetry And Adverse Wealth Effects Of Crowdfunding, Fathali Firoozi, Abol Jalilvand, Donald Lien

The Journal of Entrepreneurial Finance

The Jumpstart Our Business Startups (JOBS) Act of 2012 in the U.S. expanded the capital markets so that entrepreneurs can appeal directly to non-traditional small crowd investors for investment funds. The final rules and forms of the JOBS Act became effective in May 16, 2016. Existing literature is thus relatively small but contains ample praises for expected positive consequences of the new crowdfunding laws for the capital markets and for the crowd in general but has only limited analysis on the prospect of adverse wealth effects of crowdfunding for the crowd investors. A limited number of existing studies have highlighted …

News Management Around Equity Private Placements, Hsiao-Chen Liang, Woan-Yuh Jang

The Journal of Entrepreneurial Finance

Private placement is the sale of securities to a limited number of qualified institutions or high-wealth investors. Although private placement is favorable for firms raising capital, it is relatively easy for managers to exploit it to benefit specific investors. Using a sample of Taiwanese private placements covering 2006 to 2010, we use both quantitative and qualitative variables to examine the determinants of the valence and tenor of media coverage around private placement announcements and study whether managers strategically perform news management. The results show that issuers will engage in news management around private placement announcements to facilitate the issue process. …

When The Going Gets Tough, The Tough Get Going, Antti Fredriksson, Daniela Maresch, Matthias Fink, Andrea Moro

The Journal of Entrepreneurial Finance

A bank’s lending decision is affected by the amount of information it can access and by its capability to manage this information. The latter aspect implies that the bank has to decide whether borrowers should be managed in a local branch of the bank or in its headquarters. By looking at a sample of Finnish banks, the present research investigates a bank’s capability to extract profitability from both locally and centrally managed firms. We find that banks are able to properly discriminate between firms: those which should be managed by loan managers with expert knowledge in the bank’s headquarters due …

Start-Up Funding Via Equity Crowdfunding In Germany – A Qualitative Analysis Of Success Factors, Martin Angerer, Alexander Brem, Sascha Kraus, Andreas Peter

The Journal of Entrepreneurial Finance

Entrepreneurs often struggle to find sufficient funding for their start-ups. A relatively new way for companies to attract capital is via an internet platform, locating investors who in return receive something in return for their ventures. Equity crowdfunding is one of several types of crowdfunding, and is also known as crowdinvesting in the German-speaking realm. This article predominantly advances the scientific knowledge regarding the success factors of equity crowdfunding for German start-ups. The study conducted nine qualitative interviews with start-ups and crowdinvesting platforms. Its first result is that German start-ups select crowdinvesting because (1) it is a funding opportunity and …

2016 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.

2016 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.

On The Behavior Of Entrepreneurial Factor Supply To The Firm, Nicos Zafiris

The Journal of Entrepreneurial Finance

This paper draws on an existing, but little used, approach to the choices governing the supply of ‘entrepreneurial’, in the sense of ‘residually remunerated’, resources to an enterprise, especially post start up. It focuses in particular on the hybrid ‘own factor demand/supply curve’ to the firm of Bronfenbrenner (1960), but attempts to treat such supply in conjunction with ‘contractual’ employment of resources, thus making use of gearing and portfolio concepts. To achieve this, it is found necessary for the hybrid schedule to be reinterpreted and recast as the locus of the relevant utility maximising choices. A model is presented which …

Consumer Confidence And The Performance Of The Hospitality Industry In Business Cycles, Shane W. Harjes, Levon Goukasian

Seaver College Research And Scholarly Achievement Symposium

The purpose of this research is to examine if consumer confidence plays a role in explaining the financial performance of firms in the hospitality industry. Previous research has shown that consumer confidence has predictive power in forecasting future changes in household spending, and personal consumption growth in the US. Our findings are derived from regression analysis using the Fama-French Five Factor Model, which captures all variations of expected market returns. In order to adequately capture significant findings, we separated abnormal returns into pre-recessionary, recessionary, and post-recessionary time periods. From these findings, we will be able to determine with some certainty …

2016 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.

2016 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 …

Federal Home Loan Bank Advances And Small Business Lending, Travis R. Davidson, W. Gary Simpson

The Journal of Entrepreneurial Finance

Adequate credit availability for small businesses is an important public policy issue because small businesses are essential for employment and economic growth for the economy. The Gramm-Leach-Bliley Act of 1999 includes a provision that could potentially support financial institutions in the provision of credit to small businesses through the use of advances from the Federal Home Loan Bank (FHLB) system that are secured with small business loans. We explore the relation between FHLB advances to financial institutions and the provision of loans to small businesses. We find a positive link between the change in FHLB advances and the change in …

Commercial Bank Small Business Lending Pre And Post Crisis, Kevin T. Jacques, Richard Moylan, Peter J. Nigro

The Journal of Entrepreneurial Finance

We analyze small business lending at U.S. commercial banks, how it has changed over time and how it differs by bank size. Specifically, we examine the impact of government policy intervention on small business lending in the aftermath of the financial crisis. We find several important results. First, we find that the Troubled-Asset Relief Program’s (TARP) $200 billion Capital Purchase Program (CPP) had little impact on the banks that received capital injections’ small business lending. Second, the Small Business Loan Fund (SBLF) lending program appears to have been a success as banks participating in the loan fund increased their lending …

2016 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.

Risk Management In The Venture Capital Industry: Managing Risk In Portfolio Companies, Dorian Proksch, Wiebke Stranz, Andreas Pinkwart, Michael Schefczyk

The Journal of Entrepreneurial Finance

Managing risk is one of the main activities of venture capital companies. Despite the fact that this topic is of high practical relevance, only little research was published on risk management performed by venture capital companies in their ventures. Hence, we conducted a structured literature review which was the basis for developing five hypotheses concerning measures to decrease failure risk in venture capital-backed ventures. We tested these hypotheses with an empirical data set of 93 venture capital-backed ventures in Germany using original deal data from nine different venture capital funds using a structural equation model. We showed that the experience …

2015 Q4 Market Pulse Report, Craig R. Everett

Pepperdine Market Pulse Report

The quarterly IBBA and M&A Source Market Pulse Survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Graziado School of Business and Management at Pepperdine University.

2015 Q3 Market Pulse Report, Craig R. Everett

Pepperdine Market Pulse Report

The quarterly IBBA and M&A Source Market Pulse Survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Graziado School of Business and Management at Pepperdine University.

2015 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 mediumsized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

2015 Q2 Market Pulse Report, Craig R. Everett

Pepperdine Market Pulse Report

The quarterly IBBA and M&A Source Market Pulse Survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Graziado School of Business and Management at Pepperdine University.

2015 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 mediumsized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Pass-Through Valuation, Robert M. Hull, David P. Price

The Journal of Entrepreneurial Finance

Noted scholars argue that (1) economic models of capital taxation have been inadequately adapted to owner-managed enterprises and (2) capital structure researchers have used the wrong models while also improperly measuring key variables. Thus, a model that can overcome these problems should be of interest to academics when teaching capital structure theory and practitioners when determining optimal debt levels. This paper contributes to capital structure practice by using a model that is adaptable to owner-managed enterprises like pass-throughs while also containing relevant variables that are measurable. This paper should be valuable to academics and practitioners in the following ways. First, …

2015 Q1 Market Pulse Report, Craig R. Everett

Pepperdine Market Pulse Report

The quarterly IBBA and M&A Source Market Pulse Survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Graziado School of Business and Management at Pepperdine University.

2015 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 mediumsized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.