THE COSTS OF RAISING CAPITAL

We report the average costs of raising external debt and equity capital for U.S. corporations from 1990 to 1994. For initial public offerings (IPOs) of equity, the direct costs average 11.0 percent of the proceeds. For seasoned equity offerings (SEOs), the direct costs average 7.1 percent. For convertible bonds, the direct costs average 3.8 percent. For straight debt issues, the direct costs average 2.2 percent, although they are strongly related to the credit rating of the issue. All classes of securities exhibit economies of scale, although they are less pronounced for straight debt issues. IPOs also incur a substantial indirect cost due to short-run underpricing. Most large equity offers include an international tranche, although debt issues do not.     

INVESTOR OVEROPTIMISM AND PRIVATE EQUITY PLACEMENTS

We reexamine investor tendency to overweight recent experiences when predicting future performance of firms by examining a sample of firms making private equity placements. Our findings are consistent with the projection argument that investors use the recent experiences of other firms to predict the success of placing firms. Specifically, we find that the placements preceded by a larger number of recently very successful firms are associated with the significantly more favorable market reaction to the placement announcement and significantly poorer post‐placement stock price performance.     

温州照亮民资前景

国务院常务会议确定了温州市金融综合改革的十二项主要任务,概括地讲是,探索建立多元化的金融体系,提供多层次的金融服务。 规范发展民间融资。制定规范民间融资的管理办法,建立民间融资备案管理制度,建立健全民间融资监测体系。 加快发展新型金融组织。鼓励和支持民间资金参与地方金融机构改革,依法发起设立或参股村镇银行、贷款公司、农村资金互助社等新型金融组织。符合条件的小额贷款公司可改制为村镇银行。 发展专业资产管理机构。引导民间资金依法设立创业投资企业、股权投资企业及相关投资管理机构。 研究开展个人境外直接投资试点。探索建立规范便捷的直接投资渠道等等。     

THE ROLE OF INVESTMENT BANK REPUTATION AND RELATIONSHIPS IN EQUITY PRIVATE PLACEMENTS

We explore the role of placement agents in equity private placements. Reputable agents are more likely to place shares of firms that have performed better and that have had frequent prior relationships with the agent. Controlling for self‐selection and endogeneity, firms using reputable agents offer smaller price discounts. However, issuers having frequent prior relationships with placement agents incur higher gross spreads. Although the results support the certification role of investment banks in private placements, they also shed light on the costs incurred by issuers that frequently rely on the same investment bank.     

中小企业私募债将受宠

在金融服务实体经济以及民间资本阳光化探索的宏观政策背景下,中小企业私募债成为资本市场的新宠,机构投资者可通过专业化和职业化操作降低风险,获得较高收益。     

YANKEE BONDS AND CROSS-BORDER PRIVATE PLACEMENTS: AN UPDATE

With U.S. Treasury yields near historical lows and the recent relaxation of U.S. regulatory reporting requirements, the U.S. bond markets are more and more frequently the markets of choice for international issuers. Total crossborder U.S. bond issuance is expected to top $350 billion in 2000, easily surpassing previous issuance levels.
Overseas issuers have three primary forms through which they can participate in the U.S. long-term debt markets: publicly traded, SEC-registered bonds (commonly known as Yankee bonds); traditional private placements; and underwritten Rule 144A private placements. Each of these three financing methods has distinct benefits and limitations that should be thoroughly evaluated in light of the specific objectives of the issuer. Yankee bonds are typically the most cost efficient vehicle for large, investment grade issuers, and they are expected to account for over 75% of the $350 billion market in 2000. Second in importance is the rule 144A market, which is typically used for complex structures requiring heavy rating-agency involvement, such as future financial flow transactions and project financings. The 144A market has also become a particular favorite with international issuers because of its less formal disclosure requirements and streamlined execution process. The private placement market continues to be the dominant choice of smaller issuers, companies with complicated stories, and firms that do not wish to submit to regular scrutiny by rating agencies. This article provides a detailed analysis of each type of bond issuance and the issues facing a financial officer in trying to determine the most appropriate source of long-term debt.     

RAISING CONTINGENT CAPITAL: THE CASE OF CEPHALON

In early 1997, Cephalon, Inc., a biotechnology firm, purchased 2.5 million capped call options on its own stock, with a potential value of as much as $45 million, in exchange for $9.8 million worth of its common shares. Cephalon's first major drug, Myotrophin, was under review by the U.S. Food and Drug Administration, and Cephalon's management reasoned that, upon FDA approval, the company's stock would rise in value to reflect the future value of the drug, in which case the call options would pay off and the firm could use the proceeds to help fund commercialization of the drug. The managers thus viewed the call options as a form of “contingent capital,” capital that would be available only if and when the firm needed it. The availability and cost of financing constitute major uncertainties for any company and perhaps even more so for a biotech firm. But was the options transaction a cost‐effective way to raise capital? The authors' analysis suggests that the cost of the capped calls—underwriting fees, expenses, underpricing, and market impact—was quite high compared to alternative sources of financing that may have been available to Cephalon in the wake of a favorable decision by the FDA. An equally interesting aspect of this case is that the size of Cephalon's funding requirements was determined in large part by accounting rules and management's desire to report higher (non‐cash) earnings.     

A NOTE ON VICKERS' MARGINAL COST OF DEBT CAPITAL

Douglas Vickers has written extensively on the concept of the marginal cost of debt capital. His defmition is shown to be ambiguous and his derivation rather unusual. This paper points out the problems in his work and derives a conventional marginal cost of debt.     

A NOTE ON THE MARGINAL COST OF DEBT CAPITAL

The firms marginal cost of debt capital was interpreted in this author's previous publications as the "full marginal cost of relaxing the money capital availability constraint' when the incremental money capital employed takes the form of debt capital. Account is thereby taken of the effects on financing costs of the increased risk exposure that debt financing implies for both debt and equity holders. The present paper clarifies a misconception in a recently published paper by Draper and Findlay, and exhibits the linkage between concepts relevant to the firm's fmancing decision and the general marginal analysis.     

民间资本回归实业

民间资本进入实体经济,必须循序渐进,有条不紊地推进。要通过政府宏观政策调控和导向,使实体经济利润可期,吸引民间资本。引导民间资本投资参股或者兴办村镇银行以及专门服务于小微企业的小型金融机构,鼓励和引导民间资本进入金融领域。     

为民间投资金融领域加把力

今年以来,在国内经济形势影响和宏观调控作用下,固定资产投资增长放缓。但民间投资继续保持了较快势头,为稳定投资增长发挥了重要作用。近来,相关部门贯彻落实中央部署,相继制定出台了42项新36条的实施细则,扩大和加快向民间资本开放。民间资本投资领域和范围大大拓宽,源源不断地注入实体经济,成为支撑稳增长的重要稳定器。人们公认,金融业将成为民间资本的一个重要去处。改革开放以来,我国民