http://hdl.handle.net/2451/25929 2026-04-11T14:51:54Z http://hdl.handle.net/2451/26731 Title: THE CHOICE OF OUTSIDE EQUITY: AN EXPLORATORY ANALYSIS OF PRIVATELY HELD FIRMS Authors: Boehmer, Ekkehart; Ljungqvist, Alexander Abstract: We analyze the choice between public and private equity financing of a unique, hand-collected sample of privately held firms that have indicated their willingness to raise outside equity. We document that these firms are remarkably similar at the time of the announcement, yet 71% complete an IPO, 18% sell equity privately, and the remaining firms do not raise capital at all. To understand what determines the ultimate outcome, we follow these firms over time and record what they might learn up to their final decision. We identify the marginal conditions that favor raising outside equity, and those that determine the choice between public and private equity. Our results show that firms react systematically to changes in market conditions, such as equity returns and the cost of capital, that occur after the announcement, controlling for capital constraints, ownership structure, and the motivation for raising outside capital. 2001-04-11T00:00:00Z http://hdl.handle.net/2451/26730 Title: FALLIBLE EXECUTIVES, CENTRALIZATION OF DECISION-MAKING AND CORPORATE PERFORMANCE Authors: Adams, Renée B.; Almeida, Heitor; Ferreira, Daniel Abstract: In this paper we explore some possible consequences of fallibility in managerial decisionmaking for firm performance. Based on Sah and Stiglitz (1991), we develop the hypothesis that if managers are fallible, firm performance will be more variable as the number of managers participating in decision-making decreases, i.e. as the Þrm becomes more centralized. We use characteristics of the Executive Office to develop a proxy for the number of executives participating in top decision-making. For example, we argue that if the Chairman of the Board is not the CEO, decision-making in the Þrm will be more decentralized because the Chairman will also participate in decision-making. We test our hypothesis using this proxy (which we call the centralization index), and find that the evidence is consistent with our hypothesis. Firm performance (measured by Tobin s Q, stock returns and ROA) is signif- icantly more variable for Þrms with greater values of our centralization index. The results are consistent across various tests designed to detect differences in variability. 2001-09-09T00:00:00Z http://hdl.handle.net/2451/26729 Title: MANAGING ETHICAL RISK: THE SECURITIES INDUSTRY AND THE LAW Authors: Bear, Larry Alan; Maldonado-Bear, Rita Abstract: We examine the interplay of markets, ethics and law, and rising demand for ethical behavior in a market driven society coping with the promise and peril of rapid technological innovation. We analyze the market affecting role of our Common Law/Rule of Law System, its adaptability to social need and resultant legal and regulatory action promoting adherence to the spirit as well as the letter of the law. We provide examples of manager and firm harm from sanctions imposed despite adherence to “the rules.” Finally, we discuss competitive market/common law interplay in the coming era of the genome. 2001-10-01T00:00:00Z http://hdl.handle.net/2451/26728 Title: AN ANALYSIS OF SHAREHOLDER AGREEMENTS Authors: Chemla, Gilles; Habib, Michel; Ljungqvist, Alexander Abstract: Shareholder agreements govern the relations among shareholders in privately-held companies, such as joint ventures or venture capital-backed firms. We provide an economic explanation for the use of put and call options, pre-emption rights, catch-up clauses, drag-along rights, demand rights, and tag-along rights in shareholder agreements. We view these clauses as a response to a problem of dynamic, double moral hazard, whereby the value of the venture depends on ex ante investments and ex post transfers. Contract clauses i) preserve the incentives to make ex ante investments and ii) minimize ex post transfers. We extend our framework to discuss the use of other clauses, such as the option to extend the life of a business alliance. (JEL: G34). 2002-01-07T00:00:00Z