Fluent Essays

Each article summary must list the citation(APA format) for the article being summarized and provide 800-1000 words i which the student summarizes the main questions and conclusions of the paper and explains how the conclusions of the paper are useful to someone working in financial management of a corporation in the students current or proposed career path. The text of each summary must be 12-point Times New  Roman font, with one-inch top, bottom, left, and right margins, and each summary must begin on a new page.Journal of Corporate Finance 66 (2021) 101833 Available online 10 December 2020 0929-1199/© 2020 Elsevier B.V. All rights reserved. The role of institutional investors in corporate and entrepreneurial finance Thomas J. Chemmanur a, Gang Hu b, *, K.C. John Wei c a Carroll School of Management, Boston College, Fulton Hall 336, Chestnut Hill, MA 02467, USA b School of Accounting and Finance, Hong Kong Polytechnic University, M1038, Li Ka Shing Tower, Hung Hom, Kowloon, Hong Kong c School of Accounting and Finance, Hong Kong Polytechnic University, M1043, Li Ka Shing Tower, Hung Hom, Kowloon, Hong Kong A R T I C L E I N F O Keywords: Institutional investor Corporate finance Trading Abel Noser data A B S T R A C T Institutional investors, collectively the majority shareholders of most publicly traded corpora- tions, play important roles in almost all aspects of corporate finance. This special issue puts together sixteen papers covering a wide range of topics, such as M&As, capital structure, bonds and loans, corporate governance, IPOs, VCs, SEOs, broker/underwriter relationships, behavioral finance, corporate disclosure, and regulation. These special issue papers demonstrate that insti- tutional investors, a traditional focus of investments research, are worthy of continued and further academic inquiry in many corporate finance topics. In terms of directions for future research, we believe that the availability of new datasets (or existing datasets not yet widely used in corporate finance) and the application of new or unique research methodologies could bear fruit for researchers, as demonstrated by some papers in this special issue. In terms of datasets, the success of Abel Noser institutional trading data serves as a good example. 1. Introduction Over the last several decades, institutional investors, such as mutual funds, hedge funds, endowment funds, retirement or pension funds, insurance companies, sovereign wealth funds, and private equity firms, have come to dominate the global financial markets. In the U.S., institutional investors’ stake in the average firm rose from 20\% in 1980 to 60\% in 2014 (see, e.g., Bai et al., 2016). Hence, institutional investors play an increasingly important role in all aspects of the financial markets. If institutional investors are collectively the majority shareholders of most publicly traded corporations, what roles do they play in corporate financial decision- making, corporate governance, and corporate events? Building on the literature and seminal works such as Gillan and Starks (2000), this special issue of the Journal of Corporate Finance seeks to further our understanding of the fundamental role institutional investors play in all aspects of corporate finance in a contemporary and global setting. This collection of papers was further selected from those presented at the JCF Special Issue Conference held at the Hong Kong Polytechnic University in December Journal of Corporate Finance 66 (2021) 101813 Available online 3 December 2020 0929-1199/© 2020 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Which criteria matter when impact investors screen social enterprises? Joern H. Block a, b, c, *, Mirko Hirschmann a, Christian Fisch a, b a Trier University, Faculty of Management, 54296 Trier, Germany b Erasmus School of Economics, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, the Netherlands c Universität Witten/Herdecke, Wittener Institut für Familienunternehmen, Germany A R T I C L E I N F O JEL codes: G24 L31 G11 M13 G30 Keywords: Impact investing Entrepreneurial finance Social enterprise Conjoint analysis Screening criteria A B S T R A C T Impact investors pursue both financial and social goals and have become an important source of funding for social enterprises. Our study assesses impact investor criteria when screening social enterprises. Applying an experimental conjoint analysis to a sample of 179 impact investors, we find that the three most important criteria are the authenticity of the founding team, the importance of the societal problem targeted by the venture, and the venture’s financial sustain- ability. We then compare the importance of these screening criteria across different types of impact investors (i.e., donors, equity investors, and debt investors). We find that donors pay more attention to the importance of the societal problem and less attention to financial sustainability than do equity and debt investors. Additionally, equity investors place a higher value on the large- scale implementation of the social project than do debt investors. We contribute to the nascent literature on impact investing by documenting how impact investors make investment decisions and by providing a nuanced view of different investor types active in this novel market. Practical implications exist for both impact investors and social enterprises. 1. Introduction Impact investors pursue financial and social goals. Similar to traditional investors, impact investors aim for market-rate financial returns through the provision of financial assets (e.g., Brest and Born, 2013; Louche et al., 2012). However, in addition to these financial goals, impact investors aim for a positive environmental or social impact of their investment (e.g., Brest and Born, 2013; Harji and Jackson, 2012). Impact investing has grown in importance, and impact investors are an increasingly important source of funding for social enterprises (SE) (e.g., Geczy et al., 2019; The Economist, 2017). Since the advent of impact investing in 2007 (Rodin and Brandenburg, 2014), the market has grown to include 1340 impact investment organizations, with USD 502 billion in assets worldwide (Global Impact Investing Network (GIIN), 2019a). In addition, the increasing Contents lists available at ScienceDirect Journal of Corporate Finance journal homepage: www.elsevier.com/locate/jcorpfin Smart investments by smart money: Evidence from acquirers projected synergies Ahmad Ismaila, Samer Khalila, Assem Safieddinea, Sheridan Titmanb,⁎,1 a American University of Beirut, Olayan School of Business, Bliss Street, P.O. Box: 11-0236, Beirut, Lebanon b McCombs School of Business, University of Texas, Austin, CBA 6.266, United States A R T I C L E I N F O Keywords: Stock picking Mergers Acquisitions Institutional investors JEL classification: G23 G140 A B S T R A C T Institutional investors tend to accumulate the shares of firms that announce acquisitions. The tendency to accumulate shares is stronger when the acquirer discloses synergy forecasts, and it is especially strong when the disclosed synergies are higher. This evidence is consistent with the idea that institutional investors are attracted to situations where their superior access to man- agement and analysts provides an information advantage. Indeed, this tendency to accumulate information sensitive shares is especially strong for hedge funds, which tend to have the greatest information advantage. Moreover, stock prices respond favorably in the quarter following the acquisition announcement when higher institutional holdings are revealed. 1. Introduction Institutional investors devote considerable resources to their stock selection efforts. Starting with Grinblatt and Titman (1989), researchers have used data from the SEC filings of institutional stock holdings and find evidence consistent with the hypothesis that the efforts of these institutions do in fact lead to superior stock selections. Moreover, recent evidence suggests that hedge funds, which are incentivized to devote the most resources to these efforts, tend to outperform other categories of institutional investors.2 A plausible explanation for this superior performance is that institutions, in particular hedge funds, tend to have better access to management, and as a result, have an information advantage over retail investors. If this is indeed the case, one might expect these investors to do particularly well when their information advantage is likely to be strongest, i.e., during periods when firms experience some sort of transition. To understand this, consider how different types of investors may be influenced by equity issue announcements. Equity issues can be interpreted as good news, because they signal favorable investment opportunities, or bad news, (e.g., Myers and Majluf (1984)) because they signal that the firms stock may be overpriced. Hence, having access to soft information from management is likely to be particularly valuable when firms are raising external equity. Indeed, Gibson et al. (2004) find that institutions do tend to outperform around seasoned equity issues (SEOs). Specifically, those SEO issuers experiencing the greatest increase in institutional ownership httJournal of Corporate Finance 50 (2018) 538–555 Contents lists available at ScienceDirect Journal of Corporate Finance Review journal homepage: www.elsevier.com/locate/jcorpfin Entrepreneurial finance: Unifying themes and future directions☆ Douglas Cumming a,⁎, Alexander Peter Groh b a York University - Schulich School of Business, 4700 Keele Street, Toronto, Ontario M3J 1P3, Canada b EMLYON Business School, EMLYON Research Centre for Entrepreneurial Finance, 23 Avenue Guy de Collongue, Ecully, 69132, France a r t i c l e i n f o ference on Entrepreneurial Finance, co-organized by th owes thanks to the Social Sciences and Humanities Rese ⁎ Corresponding author. E-mail addresses: [email protected], http https://doi.org/10.1016/j.jcorpfin.2018.01.011 0929-1199/© 2018 Elsevier B.V. All rights reserved. a b s t r a c t Article history: Received 15 January 2018 Accepted 15 January 2018 We overview the papers of this special issue of the Journal of Corporate Finance and explain how they fit within the different segments of the entrepreneurial finance literature, including equity crowdfunding, angel investors, debt, venture capital, and private equity. We point to the growing importance of different sources of capital for entrepreneurs and emerging research trends pertinent to academics, practitioners, and policymakers. We explain common questions and suggest scope in future work for combining segments. © 2018 Elsevier B.V. All rights reserved. JEL codes: G20 G23 G24 Keywords: Entrepreneurial finance Equity crowdfunding Angel Investors Venture capital Private equity IPOs Contents 1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538 2. Google scholar trends in entrepreneurial finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 3. Discussing recent research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 3.1. Equity crowdfunding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 3.2. Angel finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 3.3. Debt for entrepreneurs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 3.4. Venture capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 3.4.1. Venture capital and the equity gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 3.4.2. Venture capital and IPOs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 3.5. Reporting quality of private equity backed IPOs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553 4. Future directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 5Contents lists available at ScienceDirect Journal of Corporate Finance journal homepage: www.elsevier.com/locate/jcorpfin Do institutional investors play hide-and-sell in the IPO aftermarket?☆ Tamara Nefedovaa,⁎, Giuseppe Pratobeverab a Université Paris Dauphine - PSL, CNRS, UMR[7088], DRM, 75016 Paris, France b Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria A R T I C L E I N F O Keywords: IPO allocations IPO aftermarket trading Laddering Flipping Institutional investors JEL classification: G23 G24 G39 A B S T R A C T We document a robust buy/sell asymmetry in the choice of the broker in the IPO aftermarket: institutions that sell IPO shares through non‑lead brokers tend to have bought them through the lead underwriters in the IPO aftermarket. This trading behavior is consistent with institutional investors hiding their sell trades and presumably breaking their laddering agreements with the lead underwriters. The asymmetry is the strongest in cold IPOs and is limited exclusively to the first month after the issue, when the incentives not to be detected are the strongest. We show that the intention to flip IPO allocations is not an important motive for hiding sell trades from the lead underwriters. We find that hiding sell trades is an effective strategy to circumvent underwriters monitoring mechanisms: the more institutions hide their sell trades, the less they are penalized in subsequent IPO allocations. 1. Introduction Despite considerable research on the conflicts of interest in initial public offerings, there is little evidence describing moral hazard problems faced by IPO investors. This topic deserves attention because investors behavior may ultimately affect the benefits and the costs of the book-building method. In particular, we are interested if the IPO mechanism in place motivates the choice of the broker(s) to which investors direct their trades in the IPO aftermarket. We hypothesize that the IPO bookbuilding method provides incentives to investors to avoid lead underwriters for their sell trades in the IPO stocks in the early aftermarket. Institutional investors may have an incentive to hide their sell trades from the lead underwriters in the IPO aftermarket (we call it “hide-and-sell” hypothesis) for two main reasons. First, investors might try to hide their allocations sales in order to preserve their business and relationship with the lead underwriters in the IPO allocations market. A key feature of book-built IPOs is that the investment banks that underwrite the issue have considerable discretion over who receives allocations. As explained by Jenkinson and Jones (2004), one of the popular justifications for such discretion, often emphasized by investment bankers, is that underwriters can allocate shares to long-term holders of the stock in the interests of the issuer. Investors that readily sell their allocations in the IPO aftermarket, commonly referred to as “flippers”, tend