nep-cfn New Economics Papers
on Corporate Finance
Issue of 2013‒04‒27
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. IPO underpricing in a simultaneous equations model of supply and demand: Evidence from a market of retailers By Ahmed S Alanazi; Benjamin Liu
  2. Financial Capital Structure in LBO Project Under Asymmetric Information By Ouidad Yousfi
  3. Speculating China economic growth through Hong Kong? Evidence from the stock market IPO and real estate markets By Leung, Charles Ka Yui; Tang, Edward Chi Ho

  1. By: Ahmed S Alanazi; Benjamin Liu
    Keywords: Initial public offerings, supply and demand, underpricing, allocation
    JEL: G32 G24
    Date: 2013–03
  2. By: Ouidad Yousfi (MRM - Montpellier Recherche en Management - Université Montpellier II - Sciences et techniques : EA4557 - Université Montpellier I - Université Paul Valéry - Montpellier III - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School)
    Abstract: This paper analyzes the link between the financial capital structure in LBO (Leveraged Buyout) acquisitions and the agents' incentives under asymmetric information. We present a static model with three agents: the entrepreneur, the LBO fund and the bank. The first two agents provide complementary and non-observable efforts to enhance the distribution of the project's revenues. Our results provide evidence that there are no debt-equity contracts that solve the double-sided moral hazard problem; however, the project must be financed jointly by the three partners. Moreover, financing the project through a mixture of debt and equity or solely through equity does not improve the incentive to provide efforts. Under taxation, agents provide low levels of efforts, but the entrepreneur is better off if the level of leverage is the highest to take advantage of the tax deductibility of interests.
    Keywords: Corporate Governance Journal, Financial Capital Structure, LBO Projects, Under Asymmetric Information, Leveraged Buyout, Leveraged Management Buyout.
    Date: 2012
  3. By: Leung, Charles Ka Yui; Tang, Edward Chi Ho
    Abstract: This paper argues that since China closes her asset markets, investors turn to Hong Kong instead. The initial public offerings (IPO) of Chinese firms in the Hong Kong stock market and the local housing market of Hong Kong improve the prediction of each other, as they may serve as a coordinator of herds among investors. Alternative explanations such as the “production conjecture” and “underlying factor conjecture” are found to be inconsistent with the data. Our results are also consistent with the increasing importance of Chinese tourists in the world. Directions for future research are also discussed.
    Keywords: Animal spirits conjecture, production conjecture, underlying factor conjecture, causality, wealth effect
    JEL: G10 R20 R33
    Date: 2013–04

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