Capital Structure, Information Acquisition and Investment Decisions in an Industry Framework

This paper analyzes the relationship between a firm's capital structure and its information acquisition prior to capital budgeting decisions. It is found that low-growth industries can sustain a large number of levered firms. In these industries, leverage is negatively related to a firm's incentive to acquire information during the capital budgeting process. In contrast, high-growth industries only sustain a small number of levered firms. In these industries, levered firms acquire more information than all-equity financed firms. The model yields empirical predictions regarding the effects of leverage on the expected amount and the volatility of corporate investment. While leverage does not affect firm value, highly levered firms generate a more volatile cash flow than firms with low debt levels.     

民间资本反哺实业的金融特区构想

在中小企业融资难与民间资本投资无门并存的背景下,引导民间资本反哺实业,为解决民间投资问题、扶持实体经济的发展提供了新思路。本文构想建立金融特区,架构资金融通的桥梁,以引导民间资金投资实体产业;同时,设计多样化的金融手段,打破以往对金融机构营运的限制,以平衡资金供求关系;并实行独特的运行机制,加大对实体产业的经济支持,以提升民间资本服务实体经济的能力,旨在为全国金融改革提供政策建议,从而为国民经济的健康、稳定发展做出贡献。     

Venture Capital and Other Private Equity: a Survey

We review the theory and evidence on venture capital (VC) and other private equity: why professional private equity exists, what private equity managers do with their portfolio companies, what returns they earn, who earns more and why, what determines the design of contracts signed between (i) private equity managers and their portfolio companies and (ii) private equity managers and their investors (limited partners), and how/whether these contractual designs affect outcomes. Findings highlight the importance of private ownership, and information asymmetry and illiquidity associated with it, as a key explanatory factor of what makes private equity different from other asset classes.     

Venture Capital and Private Equity: A Review and Synthesis

This paper reviews the existing literature on venture capital and private equity. The paper emphasises the importance of examining venture capital in the light of recent developments in corporate finance and its distinctiveness from other forms of finance. In order to understand current developments, the paper adopts a framework which combines industry/market and firm levels of analysis. Existing literature is reviewed using this framework. Industry level issues relate to rivalry between firms, the power of suppliers and customers, and the threats from new entrants and substitutes. Firm level issues concern deal generation, initial and second screening, valuation and due diligence, deal approval and structuring, post-contractual monitoring, investment realisation, and entrepreneurs' exit and recontracting with venture capitalists. This is followed by a review of the evidence on the performance of venture capital firms. The paper suggests potentially fruitful areas for further research including the extension of analysis to cover all stages of venture capital investment, examination of the inter-linkages between industry and firm level issues and between stages in the venture capital process, as well as further analysis of deal structuring issues and investment realisation and recontracting.     

A Survey of Managerial Incentives and Investment Bias — Common Structure but Differing Assumptions

Recent models within the agency framework concerning investment bias are reviewed, based upon a simplified structure of the pertinent information asymmetry. Tabulated overviews of contractual structures, critical assumptions, main and ancillary results, implications for future research and management are provided. As a general conclusion, the theoretical case of investment bias is rich and wide-ranging. It is now of interest to develop models and perspectives that focus more on economic fundamentals rather than pursuing additional variations of particular assumptions. Moreover, further research is needed in empirical testing and case studies. In particular, the framework promises to bring new perspectives and managerial implications on the administrative use of capital budgeting methods.     

改革开放:中国私营资本原始积累的大环境

始于20世纪70年代末的改革开放,为中国私营资本原始积累的产生与发展营造了良好的大环境。农村承包制改革、国有企业改革、引进外资政策的施行,都在解放与促进我国社会生产力的迅速发展,同时也促进了私营资本原始积累的产生与发展。允许一部分地区和一部分人先富起来的政策更是加速中国私营资本原始积累的巨大推动力量。     

The Effects of Public Venture Capital Investments on Corporate Governance: Evidence From IPO Firms in Emerging Markets

This study examines the impact of public venture capital (hereafter PVC) investments on corporate governance of initial public offering (hereafter IPO) firms in emerging markets. Using data collected from Taiwan PVC investments during 1996–2005, we analyse three corporate governance features in IPO firms: earnings management, board characteristics, and excess control by controlling shareholders. We find that PVC‐backed firms use fewer accounting accruals in their IPO financial statements than non‐PVC‐backed firms. This result suggests that PVC‐backed IPO firms engage in less earnings management than non‐PVC‐backed IPO firms. We also find PVC‐backed firms tend to set up their boards with fewer non‐independent directors and supervisors at IPO. This result indicates that PVC‐backed IPO firms have better board structures than non‐PVC‐backed IPO firms. Finally, we find that controlling shareholders are less likely to exert excess control in PVC‐backed firms than in non‐PVC‐backed firms. Overall, our results indicate that PVC investments add value to new IPO firms not only in financing their capital needs but also in creating better corporate governance structures in emerging markets.     

Reporting Frequency, Information Precision and Private Information Acquisition

Abstract:  This study examines whether the choice between quarterly and semiannual reporting affects the precision of investors' information and their private information acquisition activities. In the first part of this study, we show that a firm's reporting frequency has no effect on the average precision of investors' information. However, our analysis of announcement-period price variance and share turnover shows that an increase in reporting frequency does make interim and annual financial reports a more important component of investors' information set, relative to other sources of information. In particular, the results of this analysis suggest that investors of semiannual reporters hold more precise pre-announcement information than investors of quarterly reporters. In the second part of our study, we test one explanation for this finding. We argue that an increase in a firm's reporting frequency reduces investors' incentives to acquire private information between consecutive announcement dates and, consequently, should reduce information asymmetry among investors, increase share liquidity, and stimulate trading. Consistent with this reasoning, we find that quarterly reporters have lower average bid-ask spreads and higher abnormal share turnover than semiannual reporters.     

The Effect of Venture Capital Financing on the Sensitivity to Cash Flow of Firm's Investments

This work studies the effect of venture capital (VC) financing on firms' investments in a longitudinal sample of 379 Italian unlisted new‐technology‐based firms (NTBFs) observed over the 10‐year period from 1994 to 2003. We distinguish the effects of VC financing according to the type of investor: independent VC (IVC) funds and corporate VC (CVC) investors. Previous studies argue that NTBFs are the firms most likely to be financially constrained. The technology‐intensive nature of their activity and their lack of a track record increase adverse selection and moral hazard problems. Moreover, most of their assets are firm‐specific or intangible and hence cannot be pledged as collateral. In accordance with this view, we show that the investment rate of NTBFs is strongly positively correlated with their current cash flows. We also find that after receiving VC financing, NTBFs increase their investment rate independently of the type of VC investor. However, the investments of CVC‐backed firms remain sensitive to shocks in cash flows, whereas IVC‐backed firms exhibit a low and statistically not significant investment–cash flow sensitivity that we interpret as a signal of the removal of financial constraints.     

Capital budgeting with multiple criteria and multiple decision makers

In this article, we propose a model that incorporates the preferences of multiple decision makers into a decison-making process using (1) The analytical hierarchy process (AHP); and (2) multiple criteria and multiple constraint levels (MC²) linear programming in a capital budgeting context. Our model can foster strategic and nonfinancial factors that are important in the capital budgeting problems of the current business environment. The two-phased solution framework proposed in this article is sufficiently flexible to reach a compromise among decision makers. Our method also facilitates collection of decision makers' preferences to minimize suboptimization of overall company's goals. In addition, application of AHP to derive weights to decision makers' preferences for resource availability decreases the solution complexity. All these characteristics represent a significant improvement compared with previous linear or goal programming approaches to capital budgeting problems.     

民间资本参与社会养老服务提供的制度政策分析

我国人口老龄化发展速度加快,社会养老服务供需不平衡的矛盾凸显。机构养老的“补充”地位已经远远不能满足养老服务的实际需求。民间资本在市场需求和政府政策激励下,正越来越多地投入到社会养老服务提供中。但民间资本在参与养老服务提供的过程中面临一系列制度和政策方面的问题,影响了其参与养老服务提供的积极性。本文在对内蒙古部分民办养老机构实地调查的基础上,对相关问题进行了分析,并提出了一些对策和建议。     

论当代中国私营资本原始积累的社会功效

伴随中国私营经济而发生的私营资本原始积累,对中国的经济社会发展,对加速中国的社会主义现代化建设,是功绩卓著的。中国之所以能在20世纪末达到小康,私营资本原始积累是立下汗马功劳的。在中国今后的全面小康社会建设中私营资本原始积累必将发挥越来越大的功效。     

民间资本投资渠道拓展对策--宁波市民间资本投资现状调查分析

宁波市民间资本数量可观,活动剧烈。调查表明,宁波民间资本借贷活跃,地下钱庄发展迅速,民间炒房现象较严重,其危害性应引起有关部门的高度重视。为达到引导民间资本的投资流向,疏导其投资渠道,避免投资失误和投资渠道阻塞不畅,减少炒房现象,抑制房地产价格上扬,为需要资金的民营企业解决资金缺乏的问题等目的,作者建议应采取相应的对策。     

资本市场会计信息披露暨治理问题研究--基于上市公司会计信息披露不对称的视角

上市公司会计信息生产和披露质量直接影响了资本市场的稳定健康发展。资本市场会计信息生产和披露存在着一定的供求机理,直接影响了会计信息生产和披露的质量。由于管理主体上的虚化、内控弱化和治理结构上的偏差、会计信息系统的集成和共享性弱以及从业人员素质上的差异,使得上市公司会计信息披露存在着不充分性、非主动性、虚假性和滞后性问题,由此增加了资本市场信息不对称和风险发生的可能。因此,严厉打击资本市场会计信息造假,规范资本市场会计信息披露,需要进一步完善资本市场会计信息披露制度,创新和完善新技术背景下会计准则和会计制度,加强对现有上市公司会计信息生产和会计信息披露标准的制定和使用,提升上市公司会计信息生产和会计信息披露独立审计监督的标准化和规范化水平,加强上市公司会计信息生产和披露监督标准化体系建设。     

民营资本与经济增长——宁波市体外循环资金的基本状况及管理对策

本课题以宁波地区体外循环资金为研究对象,分析了体外循环资金的主要形式、特点、产生的原因及对整个社会经济产生的积极影响和消极影响。在此基础上,文章提出相应的政策建议:在宏观层面,国家要对体外循环资金进行正确引导,疏堵结合,积极拓宽投融资渠道,优化融资环境,平抑体外循环资金的过渡发展;在中观层面,地方政府要适合本地经济特点,切实转变职能,积极为中小企业发展创造良好的社会环境;在微观层面,工商银行要进一步提升服务水平,有效吸收民间闲散资金,削减民间借贷的资金供给,为抑制体外循环资金的过度发展做出积极的贡献。     

Market Performance Measures and Disclosure of Private Management Information in Capital Markets

Thispaper examines the optimal disclosure policyin a principal/agent setting in which investors and a managerdirectly receive pre-decision, non-contractible signals. Themanager's signal is more informative than the investors' signal.Under no disclosure, the market price provides contractible informationabout the investors' signal, whereas it does not reveal the investors'signal if the manager fully and truthfully discloses his signal.The Revelation Principle does not apply and we identify conditionsunder which no disclosure dominates full disclosure, and providea ``hurdle' model in which partial disclosure strictly dominatesboth no and full disclosure.     

Communication in Private-Information Models: Theory and Computation

Communication and no-communication versions of a two-stage principal-agent model are compared. The models contain a risk-averse agent and two sources of private information, a shock to preferences followed by a productive action. Both models are formulated as linear programs, which are then used to compute solutions to examples. For the communication model, an alternative method of accounting for the utility from off-equilibrium strategies is derived. This method greatly reduces the size of the linear program. For the no-communication model a Revelation-Principle like proof is provided. In simple cases, a sufficient condition for communication to be valuable is derived. In these cases, communication improves risk-sharing in bad states of the world. In more complicated cases, computed examples demonstrate how communication may also alter labor supply. Further examples demonstrate how action and consumption lotteries may separate agents by their shock.     

Growth Opportunities and Investment Decisions: A New Perspective on the Cost of Capital

This paper shows that it is not always correct to make an upward adjustment to the stock beta in calculating the hurdle rate for capital budgeting even when the project under consideration is riskier than existing assets. The paper also shows that the correct hurdle rate is smaller than the market capitalization rate calculated from the firm's stock beta when the project under consideration has the same risk as existing assets. In addition, it is shown that the market capitalization rate will be an underestimate (overestimate) of the correct hurdle rate when the risk of future assets is greater (smaller) than both the risk of assets in place and that of future capital expenditures. These new results are direct consequences of the insight that the firm's investment opportunities are in fact real call options written on underlying assets.     

Accruals Quality, Information Risk and Cost of Capital: Evidence from Australia

Abstract:  Recent theoretical work argues that information risk is a non-diversifiable risk factor that is priced in the capital market. Using accruals quality to proxy for information risk, Francis et al. (2005) provide empirical support for this argument using a sample of US firms. This paper re-examines the interplay of accruals quality, information risk and cost of capital in Australia, where a number of important institutional and regulatory differences are hypothesized to affect the relation between accruals quality and cost of capital. The results suggest that, while accruals quality impacts on the cost of capital for Australian firms, some salient differences exist. In contrast to findings for US firms, the costs of debt and equity for Australian firms are largely influenced by accruals quality arising from economic fundamentals (i.e., innate accrual quality) but not discretionary reporting choices (i.e., discretionary accrual quality). This finding is consistent with our predictions based on the Australian institutional and regulatory environment. In addition, using both the asset pricing tests in Francis et al. (2005) and Core et al. (2008) , we provide evidence consistent with accruals quality being a priced risk factor.