520
Views
2
CrossRef citations to date
0
Altmetric
Research Papers

Heterogeneous beliefs and optimal ownership in entrepreneurial financing decisions

ORCID Icon, ORCID Icon & ORCID Icon
Pages 1947-1958 | Received 31 Mar 2016, Accepted 19 Jan 2018, Published online: 24 Apr 2018

References

  • Allen, F. and Gale, D. , Diversity of opinion and financing of new technologies. J. Financ. Intermediation , 1999, 8 , 68–89.10.1006/jfin.1999.0261
  • Andrieu, G. and Groh, A.P. , Entrepreneurs’ financing choice between independent and bank-affiliated venture capital firms. J. Corp. Finance , 2012, 18 , 1143–1167.10.1016/j.jcorpfin.2012.07.001
  • Azevedo, A. , Pereira, P.J. and Rodrigues, A. , Non-competition covenants in acquisition deals. Econ. Letters , 2016, 143 , 61–65.10.1016/j.econlet.2016.03.025
  • Baker, M. and Wurgler, J. , Investor sentiment and the cross-section of stock returns. J. Finance , 2006, 61 , 1645–1680.10.1111/j.1540-6261.2006.00885.x
  • Bayar, O. , Chemmanur, T.J. and Liu, M.H. , A theory of capital structure, price impact, and long-run stock returns under heterogeneous beliefs. Rev. Corp. Financ. Stud. , 2015, 4 (2), 258--320. .
  • Beatty, R.P. and Ritter, J.R. , Investment banking, reputation, and the underpricing of initial public offerings. J. Finan. Econ. , 1986, 15 , 213–232.10.1016/0304-405X(86)90055-3
  • Bertoni, F. , Colombo, M.G. and Grilli, L. , Venture capital financing and the growth of high-tech start-ups: Disentangling treatment from selection effects. Res. Pol. , 2011, 40 , 1028–1043.10.1016/j.respol.2011.03.008
  • Cable, D.M. and Shane, S. , A prisoner’s dilemma approach to entrepreneur-venture capitalist relationship. Acad. Manage. Rev. , 1997, 22 , 142–176.
  • Cassar, G. , Are individuals entering self-employment overly optimistic? An empirical test of plans and projections on nascent entrepreneur expectations. Strat. Manage. J. , 2010, 31 , 822–840.
  • Casson, M. , Economics of International Business: A New Research Agenda , 2000 (Edward Elgar Publishing: Cheltenham).10.4337/9781843767015
  • Chemmanur, T. and Chen, Z. , Venture capitalists versus Angels: The dynamics of private firm financing contracts. Rev. Corp. Fin. Stud. , 2014, 3 , 39–86.10.1093/rcfs/cfu009
  • Chemmanur, T. and Krishnan, K. , Heterogeneous beliefs, IPO valuation, and the economic role of the underwriter in IPOs. Finan. Manage. , 2012, 41 , 769–811.10.1111/fima.2012.41.issue-4
  • Coval, J.D. and Thakor, A.V. , Financial intermediation as a beliefs-bridge between optimists and pessimists. J. Finan. Econ. , 2005, 75 , 535–569.10.1016/j.jfineco.2004.02.005
  • Croce, A. , Martí, J. and Murtinu, S. , The impact of venture capital on the productivity growth of European entrepreneurial firms: ‘Screening’ or ‘value added’ effect? J. Bus. Vent. , 2013, 28 , 489–510.10.1016/j.jbusvent.2012.06.001
  • Dahiya, S. and Ray, K. , Staged investments in entrepreneurial financing. J. Corp. Finance , 2012, 18 , 1193–1216.10.1016/j.jcorpfin.2012.07.002
  • De Clercq, D. and Sapienza, H.J. , The creation of relational rents in the venture capitalist-entrepreneur dyads. Vent. Capital , 2001, 3 , 107–127.10.1080/13691060110045661
  • de Meza, D. and Southey, C. , The borrowers’ curse: Optimist, finance and entrepreneurship. Econ. J. , 1996, 106 , 375–386.10.2307/2235253
  • Deng, L. , Li, S. and Liao, M. . The effect of heterogeneous beliefs on mergers and acquisitions. Appl. Econ. Letters , 2016, 1–4.
  • Dimov, D. and Murray, G. , Determinants of the incidence and scale of seed capital investments by venture capital firms. Small Bus. Econ. , 2007, 30 , 127–152.
  • Dittmar, A. and Thakor, A. , Why do firms issue equity? J. Finance , 2007, 62 , 1–54.10.1111/j.1540-6261.2007.01200.x
  • Dixit, A.K. and Pindyck, R.S. , Investment Under Uncertainty , 1994 (Princeton University Press: Princeton, NJ).
  • Elitzur, R. and Gavious, A. , A multi-period game theoretic model of venture capitalists and entrpreneurs. Eur. J. Oper. Res. , 2003, 144 , 440–453.10.1016/S0377-2217(02)00144-3
  • Elitzur, R. and Gavious, A. , Selection of entrepreneurs in the venture capital industry: An asymptotic analysis. Eur. J. Oper. Res. , 2011, 215 , 705–712.10.1016/j.ejor.2011.06.029
  • Fairchild, R. , An entrepreneur’s choice of venture capitalist or angel-financing: A behavioral game-theoretic approach. J. Bus. Vent. , 2011, 26 , 359–374.10.1016/j.jbusvent.2009.09.003
  • Fama, E.F. and French, K.R. , Dissecting anomalies with a five-factor model. Rev. Finan. Stud. , 2016, 29 , 69–103.10.1093/rfs/hhv043
  • Gompers, P.A. , Optimal investment, monitoring, and the staging of venture capital. J. Finance , 1995, 50 , 1461–1489.10.1111/j.1540-6261.1995.tb05185.x
  • Hackbarth, D. and Morellec, E. , Stock returns in mergers and acquisitions. J. Finance , 2008, 63 , 1213–1252.10.1111/j.1540-6261.2008.01356.x
  • Harris, R.S. , Jenkinson, T. and Kaplan, S.N. , Private equity performance: What do we know? J. Finance , 2014, 69 , 1851–1882.10.1111/jofi.12154
  • Hellmann, T. , The allocation of control rights in venture capital contracts. RAND J. Econ. , 1998, 29 , 57–76.10.2307/2555816
  • Hmieleski, K.M. and Baron, R.A. , Entrepreneurs’ optimism and new venture performance: A social cognitive perspective. Acad. Manage. J. , 2009, 52 , 473–488.10.5465/AMJ.2009.41330755
  • Hsu, Y.-W. , Staging of venture capital investment: a real options analysis. Small Bus. Econ. , 2010, 35 , 265–281.10.1007/s11187-008-9158-2
  • Huang, S. and Thakor, A.V. , Investor heterogeneity, investor-management disagreement and share repurchases. Rev. Finan. Stud. , 2013, 26 , 2453–2491.10.1093/rfs/hht043
  • Isaksson, A. , Cornelius, B. , Landström, H. and Junghagen, S. , Institutional theory and contracting in venture capital: The Swedish experience. Vent. Capital , 2004, 6 , 47–71.10.1080/1369106042000175582
  • Kish, R.J. , Nayar, N. and Weng, W. , IPO pricing: A case of short-sale restrictions and divergent expectations. Quant. Finance , 2012, 12 , 1439–1451.10.1080/14697688.2010.542172
  • Koellinger, P. , Minniti, M. and Schade, C. , “I think I can, I think I can”: Overconfidence and entrepreneurial behavior. J. Econ. Psych. , 2007, 28 , 502–527.10.1016/j.joep.2006.11.002
  • Lambrecht, B. and Perraudin, W. , Real options and preemption under incomplete information. J. Econ. Dynam. Control , 2003, 27 , 619–643.10.1016/S0165-1889(01)00064-1
  • Landier, A. and Thesmar, D. , Financial contracting with optimistic entrepreneurs. Rev. Finan. Stud. , 2009, 22 , 117–150.10.1093/rfs/hhn065
  • Liu, Y. and Yang, J.Q. , Optimal investment of private equity. Financ. Res Lett , 2015, 14 , 76–86.10.1016/j.frl.2015.05.013
  • Lowe, R.A. and Ziedonis, A.A. , Overoptimism and the performance of entrepreneurial firms. Manage. Sci. , 2006, 52 , 173–186.10.1287/mnsc.1050.0482
  • Lukas, E. and Heimann, C. , Technological-induced information asymmetry, M&As and earnouts: Stock market evidence from Germany. Appl. Finan. Econ. , 2014, 24 , 481–493.10.1080/09603107.2014.887189
  • Lukas, E. , Reuer, J. and Welling, A. , Earnouts in mergers and acquisitions: A game-theoretic option pricing approach. Eur. J. Oper. Res. , 2012, 223 , 256–263.10.1016/j.ejor.2012.05.017
  • Lukas, E. , Mölls, S. and Welling, A. , Venture capital, staged financing and optimal funding policies under uncertainty. Eur. J. Oper. Res. , 2015, 250 (1).
  • Lukas, E. , Mölls, S. and Welling, A. , Venture capital, staged financing and optimal funding policies under uncertainty. Eur. J. Oper. Res. , 2016, 250 , 305–313.10.1016/j.ejor.2015.10.051
  • Manove, M. and Padilla, A.J. , Banking (conservatively) with optimists. RAND J. Econ. , 1999, 30 , 324–350.10.2307/2556083
  • Metrick, A. and Yasuda A. , Venture Capital and the Finance of Innovation , 2011 (John Wiley & Sons: Hoboken, NJ).
  • Miller, E.M. , Risk, uncertainty, and divergence of opinion. J. Finance , 1977, 32 , 1151–1168.10.1111/j.1540-6261.1977.tb03317.x
  • Morellec, E. and Zhdanov, A. , The dynamics of mergers and acquisitions. J. Finan. Econ. , 2005, 77 , 649–672.10.1016/j.jfineco.2004.10.009
  • Morris, S. , Trade with heterogeneous prior beliefs and asymmetric information. Econometrica , 1994, 62 , 1327–1347.10.2307/2951751
  • Sapienza, H.J. and Korsgaard, M.A. , Procedural justice in entrepreneur-investor relations. Acad. Manage. J. , 1996, 39 , 544–574.10.2307/256655
  • Sapienza, H.J. , Korsgaard, M.A. , and Forbes, D.P. , The self-determination motive and entrepreneurs’ choice of financing. In Advances in Entrepreneurship, Firm Emergence and Growth, Vol. 6—Cognitive Approaches to Entrepreneurship Research , edited by J. Katz and A. C. Corbett , pp. 11–36, 2003 (Emerald Group Publishing).
  • Schröder, D. , Investment under ambiguity with the best and worst in mind. Math. Financ. Econ. , 2011, 4 , 107–133.10.1007/s11579-011-0036-3
  • Schwienbacher, A. , A theoretical analysis of optimal financing strategies for different types of capital-constrained entrepreneurs. J. Bus. Vent. , 2007, 22 , 753–781.10.1016/j.jbusvent.2006.07.003
  • Schwienbacher, A. , The entrepreneur’s investor choice: The impact on later-stage firm development. J. Bus. Vent. , 2013, 28 , 528–545.10.1016/j.jbusvent.2012.09.002
  • Shin, D. and Yun, S. , Upfront versus staged financing: the role of verifiability. Quant. Finance , 2014, 14 , 1069–1078.10.1080/14697688.2012.738933
  • Sorensen, M. , Wang, N. and Yang, J.Q. , Valuing private equity. Rev. Finan. Stud. , 2014, 27 , 1977–2021.10.1093/rfs/hhu013
  • Trigeorgis, L . Real Options: Managerial Flexibility and Strategy in Resource Allocation , 1996 (MIT Press: Cambridge, MA).
  • Xu, S.X. , Lu, Q. and Li, Z. , Optimal modular production strategies under market uncertainty: A real options perspective. Int. J. Product. Econ. , 2012, 139 , 266–274.10.1016/j.ijpe.2012.05.009
  • Yu, J. and Xu, B. , The game analyses to price the target enterprise of merger and acquisition based on the perspective of real options under stochastic surroundings. Econ. Modell. , 2011, 28 , 1587–1594.10.1016/j.econmod.2011.02.034

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.