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Please use this identifier to cite or link to this item: http://hdl.handle.net/2108/95

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contributor.authorBagella, Michele-
contributor.authorBecchetti, Leonardo-
contributor.authorCavallo, Laura-
description.abstractThe paper presents a theoretical analysis of the determinants affecting the controlling shareholders choice between going public and looking for a venture capital partner when they are in need of external equity financiers. In the model the two choices are strictly connected as controlling shareholders profits under the going public choice represent their outside options in case of failure of reaching an agreement in the bargaining process with the venture capital partner. We show that the relative profitability of the going public choice is inversely related to monitoring costs of new stock exchange shareholders, investment size and directly related to the presence of informational asymmetries between manager and controlling shareholders. In addition, we find that for high values of their ex ante property right share, controlling shareholders prefer the venture capital to the going public financing solution even if the first is socially inefficient. The paper also shows how stock market volatility, competition in the real and financial sector and a more efficient market for corporate control affect the going-public-venture capital choice. Our results are consistent with empirical findings on firm revealed preferences between the two financing choices.en
description.tableofcontents1 Introduction - 2. The base model under feasibility of the going public financing choice - 3. The base model when the going public financing choice is not profitable - 4.1 The effects of lump sum monitoring costs and changes in the number of small shareholders - 4.2 The effect of competition in real and financial markets - 4.3 The effect of illiquidity in the venture capital market - 4.4 The effects of poor shareholder protection in a weak institutional environment - 4.6 The effects of volatility and financial crises - 4.7 The effects of a more efficient market for corporate controlen
format.extent139731 bytes-
relation.ispartofseriesQuaderni CEIS; 123-
titleIn quest for equity partners: the determinants of the willingness to go public or to find a venture capital partneren
Appears in Collections:Quaderni
Research in Economics and Institutions

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