IPOs,trade sales and liquidations: Modelling venture capital exits using survival analysis

This paper examines the dynamics of exit options for US venture capital funds. Using a sample of more than 20,000 investment rounds, we analyze the time to ‘IPO’, ‘trade sale’ and ‘liquidation’ for 6000 VC-backed firms. We model these exit times using competing risks models, which allow for a joint analysis of exit type and exit timing. The hazard rate for IPOs are clearly non-monotonic with respect to time. As time flows, VC-backed firms first exhibit an increased likelihood of exiting to an IPO. However, after having reached a plateau, non-exited investments have fewer possibilities of IPO exits as time increases. This sharply contrasts with trade sale exits, where the hazard rate is less time-varying. We further provide evidence on the impact of economic factors such as syndicate size and composition, geographical location and VC value adding, on exit outcomes.     

The private sector in the Soviet Union and China

The private sector in the fields of agriculture, wholesaling and retailing, craft trades and light industry, already well-developed in the People’s Republic of China and a number of Eastern European countries, is now to be given a more significant role in the Soviet Union. Moscow’s economic reformers believe this will contribute to an improved standard of living, as has been the case in China during the economic reform which has now been underway since 1978/79. It is therefore tempting to compare the concepts underlying the reforms and the course they have taken in the two socialist “super-powers”, the key question being whether the Russians will achieve similar successes with their reforms, once all the teething troubles are overcome, to those of the Chinese.     

The CAP is Destroying the EEC

The Common Agricultural Policy of the European Economic Community threatens to pull Europe apart. Seven eminent German economists, the Kronberger Kreis, demonstrate the political and economic tailings of the CAP. They argue in this short version prepared by Dr klaus Peter Krause of a book to be published in German that without radical reform the CAP will continue to generate massive wastage, subvent the efforts of farmers throughout the Community, provoke widespread political tension both inside and outside the Community, and force unnecessarily high prices on consumers. Two British commentators examine the importance of the Kronberger Kreis Supplement for the agricultural markets in Europe and the Third World.     

An Extended Analytical Approach to Credit Risk Management

Among the 'reduced form models' for measuring the credit risk of a bank's portfolio is CreditRisk+, which provides a closed–form solution for calculating the portfolio loss distribution based on an actuarial approach. The limitations of this model are well known, but they are often misinterpreted as being deeply embedded within the model. Dismantling the mathematical components of the model allows one to modify and extend it in several ways while remaining within an analytical approach. One of the most unattractive features is the orthogonality of the background factors or sectors as it hinders any resemblance to real–world macroeconomic indexes or industrial sectors and geographical areas. Among other extensions, which we mention briefly, we present in more detail how the original model can be amended to consider correlations among default risk sectors and among severity risk segments. These extensions are applied to real–life data, based on mortality rate data produced by the Italian Central Bank.
(J.E.L.: C00, C51).     

China’s reform of socialism on trial

Western public opinion frequently voices uncritical applause for the economic reforms in the People’s Republic of China. The expectation of large sales opportunities in the Chinese market has led to a kind of China-euphoria in certain business circles. This frequently overlooks the fact that there are a wide variety of problems in implementing the reforms, which still have to be truly put to the test.     

Level-Scheduling bei Variantenfließfertigung: Klassifikation, Literaturüberblick und Modellkritik

Manufacturers of consumer goods nowadays have to cope with an enormous product variety, which is to be produced on their assembly systems. Car manufacturer BMW for example, offers its automobiles in 10³² theoretically possible variations. A sophisticated production planning is essential, so that the market benefits of a diversified product portfolio are not spoiled by inefficient production processes. A critical issue in this context is the short-term sequencing, determining the order in which models are processed on the assembly system. As part of the “Toyota Production System” the so called level-scheduling has established, which aims at evenly smoothing the material requirements induced by the production sequence over time, so that a just-in-time supply of material is enabled and inventories are minimized. This paper provides a systematic overview on the wide range of publications on level scheduling and controversially discusses its appropriateness for practical applications.     

Der Dauerstreit um Chinas Währungspolitik

China hat im Juni angekündigt, seine starre W?hrungspolitik zu lockern. Die chinesische Zentralbank l?sst aber wohl auch künftig nur geringfügige ?nderungen des Wechselkurses zu. Die M?glichkeiten des IWF, der WTO oder einzelner Staaten dieser W?hrungspolitik entgegenzutreten, werden hier erl?utert.