Search results for "value"
showing 10 items of 5321 documents
The impact of systemic and illiquidity risk on financing with risky collateral
2015
Abstract Repurchase agreements (repos) are one of the most important sources of funding liquidity for many financial investors and intermediaries. In a repo, some assets are given by a borrower as collateral in exchange of funding. The capital given to the borrower is the market value of the collateral, reduced by an amount termed as haircut (or margin). The haircut protects the capital lender from loss of value of the collateral contingent on the borrower׳s default. For this reason, the haircut is typically calculated with a simple Value at Risk estimation of the collateral for the purpose of preventing the risk associated to volatility. However, other risk factors should be included in th…
Staged Venture Capital Contracting with Ratchets and Liquidation Rights
2011
Abstract This paper uses real options analysis to study later round financing in the presence of two standard venture capital contracting provisions: anti-dilution (ratchet) and liquidation preference. We argue that such provisions can preclude financing of a positive NPV venture in the case of a large follow-on financing relative to firm value. Liquidation preference contracting at multiples greater than one is not feasible in the later round if the financing is small relative to firm value. We highlight an interaction effect between the two provisions: increasing the liquidation multiple can help to avoid dilution and the need for the prior venture capitalist to waive ratchet provisions.
Do acquirers’ stock prices fully react to the acquisition announcement of listed versus unlisted target firms? Out-of-sample evidence from Spain
2014
Previous results are ambiguous about whether prices fully reflect value creation or destruction at the time of the acquisition announcement when samples are split into listed and unlisted target firms. We find that the Spanish market fully reacts to the acquisition announcement (showing value creation only for unlisted target firm acquisitions), except for the smallest bidders of public targets since we find significant positive abnormal returns for a 24-month post-acquisition window. This evidence is consistent with investors extrapolating the performance of large acquirers of public firm to smaller ones and, therefore, only identifying value creation in the long term.
Stakeholder Value in European Savings Banks
2000
In the European banking literature there appears to be a paucity of empirical research on the competitive performance of savings banks. A few broad (‘seminal’) studies, of European savings banks have been published in recent years however.1 This chapter aims to produce some follow-up evidence focussing on one of the key aspects of bank management today (stakeholder value).
Joan Robinson and Keynes: finance, relative prices and the monetary circuit.
2003
Joan Robinson's views on credit and money are discussed only rarely. Of late, however, some Post-Keynesians have sought to revive these views, claiming that Robinson was one of the original contributors to the theory of endogenous money, post Keynes. This paper has two objectives. First, it seeks to develop Robinson's views on credit, money and finance and to show that not only did she have a clear understanding of the theory of endogenous money, but that she also held views akin to the theory of the monetary circuit. Second, the paper addresses Robinson's dismissal of the problem of relative prices and the conventional theory of value. Once again, it shows that Robinson's position is conne…
Extreme value theory versus traditional GARCH approaches applied to financial data: a comparative evaluation
2013
Although stock prices fluctuate, the variations are relatively small and are frequently assumed to be normally distributed on a large time scale. But sometimes these fluctuations can become determinant, especially when unforeseen large drops in asset prices are observed that could result in huge losses or even in market crashes. The evidence shows that these events happen far more often than would be expected under the generalised assumption of normally distributed financial returns. Thus it is crucial to model distribution tails properly so as to be able to predict the frequency and magnitude of extreme stock price returns. In this paper we follow the approach suggested by McNeil and Frey …
Financial Management as a Tool for Achieving Stable Firm Growth
2016
Abstract The purpose of this study is to show that financial management in the firm is a tool for achieving stable firm growth and long-term firm stability while problems in firm financial management lead to the inability of firms to ensure sustainable growth of their value. This problem is relevant for firms in all countries. The main objectives of this paper are: to analyse dynamics of value of the largest Latvian firms, to determine the drivers of these dynamics and to establish the main problems slowing the growth of firm value, which are related to the drawbacks in financial management, and to provide suggestions for solving these problems. This study analyses financial management proc…
Technological Districts and the Financing of Innovation: Opportunities and Challenges for Local Banks
2015
The paper deals with the role that local banks (especially credit cooperative banks) might play in financially supporting the development of technological districts and innovative firms. After introducing the concept and features of technological districts, it focuses on the relations between districts and local banks and between the adoption of innovation and local banking. The central part is an econometric exercise aimed at measuring the weight of high value financial services over the income of a sample of Italian credit cooperative banks. Taking into account the cultural, managerial and organizational requirements of local banks, the work provides insights into how this category of ban…
Financing Unemployment Benefits: Dismissal versus Employment Taxes
2006
This paper investigates the effects of using dismissal taxes to finance unemployment benefits. We compare dismissal and employment taxes in a model with search frictions. Employment taxes give rise to externalities because firms do not take into account the effects their dismissal decisions have on others. By introducing dismissal taxes to finance unemployment insurance, these externalities can partly be internalized. Taking into account the budget of the unemployment insurance, employment taxes can be reduced by more than necessary to offset the adverse effect of dismissal taxes on the firm value. The introduction of dismissal taxes leads to higher job creation and lower unemployment, in c…
Value Creation When Acquiring Public vs Private Firms. Spanish Evidence
2013
We investigate shareholder value creation of Spanish listed firms in response to announcements of acquisitions of unlisted companies and compare this experience to the purchase of listed firms over the period 1991–2011. Similar to foreign markets, acquirers of listed targets earn insignificant average abnormal returns. However, acquirers of listed targets that perform a first bid show significant negative abnormal returns. Acquirers of unlisted targets gain significant positive average abnormal returns. When we relate these results to company and transaction characteristics our evidence suggests that the listing status effect is mainly associated with the fact that unlisted firms tend to be…