Exit timing of venture capitalists in the course of an initial public offering

We analyze the desinvestment decision of venture capitalists in the course of an IPO of their portfolio firms. The capital market learns of the project quality only in the period following the IPO. Venture capitalists with high-quality firms face a trade-off between immediately selling their stake in the venture at a price below the true value and having to wait until the true value is revealed. We show that the dilemma may be resolved via a reputation-acquiring mechanism in a repeated game set-up. Thereby, we can explain, e.g., the advent of "hot-issue market behavior" involving early disinvestments and a high degree of price uncertainty. Furthermore, we provide a new rationale for underpricing. Young venture capitalists may use underpricing as a device for credibly committing themselves to acquiring reputation

Risk and the role of collateral in debt renegotiation

In his basic model of debt renegotiation, BESTER [1994] argues that collateral is more effective if high risk projects are financed. This result, however, crucially depends on the definition of risk. Using the second-order stochastic dominance criterion introduced by ROTHSCHILD AND STIGLITZ [1970], we show that it is not a project's high risk, induced by a high probability of default, that makes collateral more effective. Instead it turns out that, given the expected return, the probability of default has no impact on the collateral's effectiveness. Moreover, a higher risk of the project caused by a higher loss given default makes the use of collateral even less effective. --Debt renegotiation,Collateral,Risk,Stochastic dominance

Market Structure, Scale Efficiency, and Risk as Determinants of German Banking Profitability

The Scale-Efficiency version of the Efficient-Structure Hypothesis and the Structure-Conduct-Performance Hypothesis find empirical support in German banking data from 1998 to 2002. Due to the acceptance of the two hypotheses and the existence of overall economies of scale, we conclude that German banks may improve their profitability by increasing their asset size and/or by consolidation. The increased banking profitability will not only come from monopolistic power (higher concentration rate) but also from the scale efficiency benefit. We also find that portfolio risk is a key factor in determining the profit-structure relationship. --Profit-structure relationship,Market Structure,Scale efficiency,Portfolio Risk

Market Structure, Common Ownership and Coordinated Manager Compensation

We study oligopolistic competition in product markets where the firms’ quantity decisions are delegated to managers. Some firms are commonly owned by shareholders such as index funds whereas the other firms are owned by independent shareholders. Under such an asymmetric ownership structure, the common owners have an incentive to coordinate when designing the manager compensation schemes. This implicit collusion induces a less aggressive output behavior by the coordinated firms and a more aggressive behavior by the noncoordinated firms. The profits of the noncoordinated firms are increasing in the number of coordinated firms. The profits of the coordinated firms exceed the profits without coordination if at least 80 % of the firms are commonly owned - an astonishing resemblance to the merger literature

Fusionsanreize, strategische Managerentlohnung und die Frage des geeigneten Unternehmensziels

Im klassischen Beitrag von Salant, Switzer und Reynolds (1983) wird für symmetrische Unternehmungen gezeigt, daß bei Verfolgung einer Mengenpolitik Fusionen zur Einschränkung des Wettbewerbs nur dann für die beteiligten Unternehmungen lohnend sind, wenn wenigstens 80 % der Unternehmungen an der Fusion beteiligt sind. Jüngere Ansätze, zum Beispiel von Ziss (2001), belegen, daß dieses Ergebnis relativiert werden muß, wenn berücksichtigt wird, daß die Anteilseigner der Unternehmungen die Managerentlohnung als strategische Variable zur Beeinflussung des Wettbewerbs einsetzen. Im vorliegenden Beitrag wird nachgewiesen, daß bei schon vor der Fusion abgestimmt handelnden Unternehmungen die Fusionsanreize strikt positiv sind. Ein solches abgestimmtes Verhalten wird zum Beispiel durch eine Klientelbildung unter den Anteilseignern hervorgerufen. Die nähere Diskussion zeigt, daß die in Oligopolmodellen regelmäßig ohne nähere Begründung verwendete Zielsetzung "Maximierung des Gewinns einer einzelnen Unternehmung" in Zweifel zu ziehen ist

Risk and the Role of Collateral in Debt Renegotiation

In his basic model of debt renegotiation, BESTER [1994] argues that collateral is more effective if high risk projects are financed. This result, however, crucially depends on the definition of risk. Using the second-order stochastic dominance criterion introduced by ROTHSCHILD AND STIGLITZ [1970], we show that it is not a project’s high risk, induced by a high probability of default, that makes collateral more effective. Instead it turns out that, given the expected return, the probability of default has no impact on the collateral’s effectiveness. Moreover, a higher risk of the project caused by a higher loss given default makes the use of collateral even less effective

Market structure, scale efficiency, and risk as determinants of German banking profitability

The Scale-Efficiency version of the Efficient-Structure Hypothesis and the Structure-Conduct-Performance Hypothesis find empirical support in German banking data from 1998 to 2002. Due to the acceptance of the two hypotheses and the existence of overall economies of scale, we conclude that German banks may improve their profitability by increasing their asset size and/or by consolidation. The increased banking profitability will not only come from monopolistic power (higher concentration rate) but also from the scale efficiency benefit. We also find that portfolio risk is a key factor in determining the profit-structure relationship

Zinsswaps - Funktionsweise, Bewertung und Diskussion

Ein Swap ist ein Vertrag zwischen zwei Parteien, die sich zum gegenseitigen Austausch zukünftiger Zahlungen verpflichten. Die Vereinbarung determiniert die Zeitpunkte, an denen die Zahlungen zu erfolgen haben, und in welcher Weise deren Betrag zu bestimmen ist. Während bei Forward-Geschäften der Transfer von Zahlungen zu einem einzigen Zeitpunkt in der Zukunft stattfindet, führen Swaps zu deren Übertragung an mehreren künftigen Zeitpunkten. Swaps lassen sich daher auch als eine Folge von Forward-Geschäften interpretieren. Infolge ihrer großen Bedeutung werden Zinsswaps in allen wesentlichen Lehrbüchern zur Bankwirtschaft und zur Finanzwirtschaft angesprochen. Ziel dieses Beitrags ist es, die diskussionsbedürftigen Aspekte offenzulegen und zu kommentieren sowie einen elementaren Bewertungsansatz vorzustellen. Da sich die kritischen Anmerkungen auf Lehrbücher beziehen, ist die Darstellung auf die Adressaten von Lehrbüchern zugeschnitten

Gender and Responsible Gambling in Spain. The Social Gambling Questionnaire for Women (SGQW-47), a new screening instrument

Objective: The aim of this study is to develop a questionnaire to assess responsible gambling habits in females of the general population, to explore its psychometric properties and to compare the results between a community sample and a clinical sample of patients with gambling disorder. We also aim at providing empirical evidence of the gambling habits among Spanish females. Method: Two samples were selected to develop the questionnaire and to explore gambling habits in female Spanish population. The clinical sample was recruited from the Pathological Gambling Unit at the University Hospital of Bellvitge (Barcelona, Spain), comprising 30 patients. The community sample was recruited from individuals visiting the hospital for the Dentistry and Chiropody Departments, placed at the same university hospital and it comprised 316 females. Results: The questionnaire showed high values for sensitivity and specificity, discriminating between patients with gambling disorder and healthy controls. More than a 3% of the females from the community sample presented a problematic gambling behavior. In relation to predictors of gambling behavior, low socioeconomic status emerged as the unique socio-demographic factor for problematic gambling. Moreover, the illusion of winning money through gambling or feeling better by gambling were powerful stimulators of gambling behavior. Conclusions: Despite being male is strongly associated with the development of problem gambling, females can also be considered "at risk gamblers" themselves. To explore gambling habits of this population, identifying potentially harmful behaviors, in order to maintain responsible gambling habits, may contribute to the development of prevention and education programs promoting the general health of the community