This paper explores the advantage of private equity in turnaround situations. Since the analysis and recovery plan of floundering businesses is typically carried out by an external turnaround specialist, it is not clear what causes a breakdown in the ownership-management separation. The paper...

Venture capital funding is commonly provided to start-up firms on a piecemeal basis over numerous stages. One way in which this can be implemented is through milestone financing, where a venture capitalist commits upfront to providing additional future funding contingent upon the firm meeting...

We explore equilibrium corporate capital structure under the tradeoff that additional debt generates the familiar corporate tax benefit, while additional equity generates more information about the value of growth opportunities, allowing a more precise estimate of the return on real investment....

In this paper, we examine how stock option usage affects total corporate payout. Using fixed-effects panel data estimators on various samples of Execucomp firms from 1993 to 2005, we find the higher the executive stock options, the lower the total payout, ceteris paribus. We also find some...

We examine the risk shifting problem of capital investments in a dynamic context. We find that when a firm has a long- lived project and may issue debt in the future, the risk- shifting problem is partially ameliorated early in the project life. In fact, if the potential future cash flows...

Recently, spread futures, a futures contract whose underlyingasset is the difference of two futures contracts with differentdelivery dates, have been successfully introduced for fourdifferent financial futures contracts traded on the ChicagoBoard of Trade. A spread futures contract is a...

We investigate the long-standing puzzle on the underpricings of convertible bonds. We hypothesize that the observed underpricing is induced by the possibility that a convertible bond might renegotiate on some of its covenants, e.g., an imbedded put option, in financial difficulties. Consistent...

A comparison of single and multifactor portfolio performance methodologies using Value Line and size-ranked portfolios indicates that although both methodologies provide unbiased estimates of portfolio performance, there are systematic differences in the power of the two methodologies. The...

The pricing equation of Ross' (1976) APT model is derived using estimable parameters. Estimation errors are discussed in the framework of elementary perturbation analysis. Theoretically, a simple link is provided among the mean-variance efficient set mathematics, mutual fund separations,...