nep-cfn 2010-06-11 papers

on Corporate Finance

Issue of 2010‒06‒11
two papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

Resource access needs and capabilities as mediators of the relationship between VC firm size and syndication By E. VERWAAL; H. BRUINING; M. WRIGHT; S. MANIGART; A. LOCKETT;
Devising a non-standard convertible zero-coupon bond to enhance corporate governance By Rodolfo Apreda

Resource access needs and capabilities as mediators of the relationship between VC firm size and syndication

By:	E. VERWAAL; H. BRUINING; M. WRIGHT; S. MANIGART; A. LOCKETT;
Abstract:	Drawing from the resource-based view and transaction costs economics, we develop a theoretical framework to explain why small and large firms face different levels of resource access needs and resource access capabilities, which mediate the relationship between firm size and hybrid governance. Employing a sample of 317 venture capital firms, drawn across 6 European countries, we empirically assess our framework in the context of venture capital syndication. We estimate a path model using structural equation modeling and find, consistent with our theoretical framework, mediating effects of different types of resource access needs and resource access capabilities between VC firm size and syndication frequency. These findings advance the small business literature by highlighting the trade-offs that size imposes on firms that seek to manage their access to external resources through hybrid governance strategies.
Keywords:	venture capital, firm size, investment syndication, resource access capabilities, resource access needs, transaction cost economics, hybrid governance
JEL:	G2 G3 D8
Date:	2010–03
URL:	http://d.repec.org/n?u=RePEc:rug:rugwps:10/648&r=cfn

Devising a non-standard convertible zero-coupon bond to enhance corporate governance

By:	Rodolfo Apreda
Abstract:	This research paper brings forward a non-standard convertible zero-coupon bond endowed with a set of distinctive features attached to it so as to strengthen the corporate governance of the issuer, namely that conversion actually takes place at maturity date only; that conversion is mandatory; it offers investors a pay-off function tailored to match the conversion; there is no call provision whatsoever; it is suitable for private or public placements; credit-risk rating is of the essence and, lastly, it requires from the company a track record statement on behalf of investors. Although this sort of bond actually provides the company with a powerful financing vehicle, we argue that it could also play a constructive role if it were used in compensation packages for rewarding both senior managers and the Board of Directors.
Keywords:	zero-coupon bond, convertible bond, corporate governance, covenants, compensation packages, track record statement
JEL:	G34 G32 G11 G12
Date:	2010–05
URL:	http://d.repec.org/n?u=RePEc:cem:doctra:421&r=cfn

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