Financial Contracting Wih Optimistic Entrepreneurs: Theory and Evidence
Author : Augustin Landier
Publisher :
Page : pages
File Size : 32,75 MB
Release : 2003
Category :
ISBN :
Financial Contracting with Optimistic Entrepreneurs
Author : Augustin Landier
Publisher :
Page : 60 pages
File Size : 12,74 MB
Release : 2015
Category :
ISBN :
Book Description
This paper looks at the effects of entrepreneurial optimism on financial contracting and corporate performance. Optimism may increase effort, but is bad for adaptation decisions as the entrepreneur underweights negative information. The first-best contract with an optimist uses contigencies for two distinct purposes: (1) bridging the gap in beliefs by letting the entrepreneur take a bet on his project's success, and (2) imposing adaptation decisions in bad states. When the contract space is restricted to debt, there may exist a separating equilibrium where optimists self-select in short-term debt and realists in long-term debt.We confront our theory to a large dataset of entrepreneurs. First, we find that differences in beliefs may be (partly) explained by usual determinants put forward in psychology and management literature. Second, in line with the two main predictions of our model, we find that (1) optimists tend to borrow more short term and (2) those optimists that borrow more short term perform better. Last, we find that firms run by optimists tend to grow less, die sooner and be less profitable, which we view as a confirmation that our measure of optimism does not proxy high risk - high return projects.
Financial Contracting with Optimistic Entrepreneurs
Author : Augustin Landier
Publisher :
Page : pages
File Size : 18,37 MB
Release : 2013
Category :
ISBN :
Book Description
Optimistic beliefs are a source of nonpecuniary benefits for entrepreneurs that can explain the ldquo;Private Equity Puzzle.rdquo; This paper looks at the effects of entrepreneurial optimism on financial contracting. When the contract space is restricted to debt, we show the existence of a separating equilibrium in which optimists self-select into short-term debt and realists into long-term debt. Long-term debt is optimal for a realist entrepreneur as it smooths payoffs across states of nature. Short-term debt is optimal for optimists for two reasons: (i) ldquo;bridging the gap in beliefsrdquo; by letting the entrepreneur take a bet on his project's success, and (ii) letting the investor impose adaptation decisions in bad states. We test our theory on a large data set of French entrepreneurs. First, in agreement with the psychology literature, we find that biases in beliefs may be (partly) explained by individual characteristics and tend to persist over time. Second, as predicted by our model, we find that short-term debt is robustly correlated with ldquo;optimisticrdquo; expectation errors, even controlling for firm risk and other potential determinants of short-term leverage.
Financial Contracting with Optimistic Entrepeneurs
Author : Augustin Landier
Publisher :
Page : 50 pages
File Size : 26,48 MB
Release : 2003
Category : Capital investments
ISBN :
Book Description
Who are the Microenterprise Owners? Evidence from Sri Lanka on Tokman V. de Soto
Author : Christopher Woodruff, David McKenzie, Suresh de Mel
Publisher : World Bank Publications
Page : 35 pages
File Size : 29,74 MB
Release : 2008
Category : Education
ISBN :
Book Description
Abstract: Is the vast army of the self-employed in low income countries a source of employment generation? This paper uses data from surveys in Sri Lanka to compare the characteristics of own account workers (non-employers) with wage workers and with owners of larger firms. The authors use a rich set of measures of background, ability, and attitudes, including lottery experiments measuring risk attitudes. Consistent with the International Labor Organization's views of the self employed (represented by Tokman), the analysis finds that two-thirds to three-quarters of the own account workers have characteristics which are more like wage workers than larger firm owners. This suggests the majority of the own account workers are unlikely to become employers. Using a two and a half year panel of enterprises, the authors show that the minority of own account workers who are more like larger firm owners are more likely to expand by adding paid employees. The results suggest that finance is not the sole constraint to growth of microenterprises, and provides an explanation for the low rates of growth of enterprises supported by microlending.
Proceedings of the 4th International Conference on Economic Management and Green Development
Author : Chunhui Yuan
Publisher : Springer Nature
Page : 527 pages
File Size : 41,81 MB
Release : 2021-08-13
Category : Business & Economics
ISBN : 9811653593
Book Description
The proceedings shed light on selected topics including economic management, public administration, and green development. Featuring scholarly works from the 4th International Conference on Economic Management and Green Development (ICEMGD 2021), this volume of proceedings showcases the papers composed with regard to a diverse range of topics situated at the intersecting field of Economic Management, Public Administration and Green Development. Arising as the top concern of the global community, issues of green development impose challenges for the academia to bridge the interdisciplinary prowess in tackling the gap of knowledge within concerned fields. ICEMGD 2021 is an annual conference initiated by the year of 2017 under the goal of bringing together intellectuals from economics, business management, public administration, and otherwise related spheres for the share of research methods and theoretical breakthroughs. The aim of the proceeding volume is for the integration of social scientific research methods with research into alarming development issues. The ICEMGD 2021 seeks to promote joint initiatives among well-established fields like macro- and microeconomics, international economics, finance, agricultural economics, health economics, business management and marketing strategies, regional development studies, social governance, and sustainable development. Featuring interdisciplinary contributions, this book will be of interest to researchers, academics, professionals and policy makers in the field of economic management, public administration, and development studies.
Advances in Entrepreneurial Finance
Author : Rassoul Yazdipour
Publisher : Springer Science & Business Media
Page : 255 pages
File Size : 11,31 MB
Release : 2010-12-17
Category : Business & Economics
ISBN : 1441975276
Book Description
Advances in Entrepreneurial Finance brings together contributions from researchers from the fields of entrepreneurship, behavioral finance, psychology, and neuroscience to shed new light on the dynamics of decision making and risk taking by entrepreneurs and venture capitalists (VCs). Every new venture requires access to capital at competitive interest rates, and much has been written on general entrepreneurship by management scholars and financial contracting by financial economists using traditional finance theory with all its highly restrictive assumptions regarding decision makers’ cognitive capabilities and behavior. But recent developments in behavioral finance can now be applied to understand how entrepreneurs and VCs perceive risk and uncertainty and how they decide and act accordingly. Showcasing the latest research, this volume demonstrates that findings from the behavioral and neuroscience arenas can and do explain decision making by entrepreneurs and venture investors in the real world. Consequently, such findings have practical implications not only for entrepreneurs, venture capitalists, and their advisors, but also all government agencies and NGOs that want to support product and technological innovation, capital formation, job creation, and economic development.
The Innovative Entrepreneur
Author : Daniel F. Spulber
Publisher : Cambridge University Press
Page : 385 pages
File Size : 19,13 MB
Release : 2014-06-16
Category : Business & Economics
ISBN : 1139952617
Book Description
Innovative entrepreneurs are the prime movers of the economy. The innovative entrepreneur helps to overcome two types of institutional friction. First, existing firms may not innovate efficiently due to incumbent inertia resulting from adjustment costs, diversification costs, the replacement effect, and imperfect adjustment of expectations. The innovative entrepreneur compensates for incumbent inertia by embodying innovations in new firms that compete with incumbents. Second, markets for inventions may not operate efficiently due to transaction costs, imperfect intellectual property protections, costs of transferring tacit knowledge, and imperfect information about discoveries. The innovative entrepreneur addresses inefficiencies in markets for inventions through own-use of discoveries and adoption of innovative ideas. The Innovative Entrepreneur presents an economic framework that addresses the motivation of the innovative entrepreneur, the innovative advantage of entrepreneurs versus incumbent firms, the effects of competitive pressures on incentives to innovate, the consequences of creative destruction, and the contributions of the innovative entrepreneur to the wealth of nations.
Lecture Notes In Behavioral Finance
Author : Itzhak Venezia
Publisher : World Scientific
Page : 288 pages
File Size : 14,78 MB
Release : 2018-06-27
Category : Business & Economics
ISBN : 9813231580
Book Description
This volume presents lecture notes for a course in behavioral finance, most suitable for MBA students, but also adaptable for a PhD class. These lecture notes are based on the author's experience in teaching behavioral finance classes at Bocconi University (at the PhD level) and at the Academic College of Tel Aviv-Yaffo (MBA).Written in a way that is user-friendly for both teachers and students, this book is the first of its kind and consolidates all the material necessary for a course on behavioral finance, balancing psychological concepts with financial applications. Material formerly presented only in academic papers has been transformed to a format more suitable for students, while the most important issues have been highlighted in boxes that can form the basis of a lecturer's teaching slides.In addition to corralling all the currently scattered materials into one book, a neat logical order is introduced to the subject matter. Behavioral finance is put in a context relative to the other disciplines of finance, its history is outlined and the way it evolved — from an eclectic collection of counter examples to market efficiency into a bona fide discipline of finance — is reviewed and explained.The 17 topic-based chapters in this book are each intended for a 90-minute lecture. The first five chapters (Part 1) provide the psychological and financial foundations of behavioral finance. The next 12 chapters (Part 2) are applications: Chapters 6-13 cover the essentials while Chapters 14-17 are special, elective topics.
Measuring Entrepreneurship
Author : Emilio Congregado
Publisher : Springer Science & Business Media
Page : 348 pages
File Size : 43,8 MB
Release : 2007-11-15
Category : Business & Economics
ISBN : 0387722882
Book Description
This volume provides a comprehensive review of the theoretical concepts and empirical models of entrepreneurship from a non-conventional perspective. It makes recent advances in the theory and application of the economics of entrepreneurship accessible to a wider audience, including policy makers. It emphasizes data requirements to advance the future research agenda and to allow for a better design and monitoring of entrepreneurial policy.
