search query: @author Becchetti, L. / total: 10
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| Author: | Bagella, M. Becchetti, L. |
| Title: | The optimal financing strategy of a high-tech firm: the role of warrants |
| Journal: | Journal of Economic Behavior and Organization
1998 : VOL. 35:1, p. 1-24 |
| Index terms: | ECONOMIC BEHAVIOUR ORGANIZATION COMPANIES |
| Language: | eng |
| Abstract: | The paper presents a signalling model in three periods where bad, medium and good firms choose among five potential financing strategies. It shows that a bond-plus- equity warrant (BW) issue is the optimal strategy ensuring a separating equilibrium between mediul firms and other types of firms. It also shows that departures from the basic model assumptions, such as lower expected value of the innovation and exposure to non-diversifiable risk, may lead to a pooling equilibrium with adverse selection effects for high-tech firms and explains how these negative consequences may be avoided. |
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