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Article
Publication date: 21 December 2020

Garrison Hongyu Song and Ajeet Jain

This paper aims to explore the allocation of the exit value of a start-up company in market equilibrium between an angel investor and an entrepreneur in the very…

Abstract

Purpose

This paper aims to explore the allocation of the exit value of a start-up company in market equilibrium between an angel investor and an entrepreneur in the very early-stage financing market.

Design/methodology/approach

The theoretical model is established based on the two-sided random search theory and the model’s ability to match the empirical data is evaluated via simulation.

Findings

The model indicates that the allocation of the final investment outcome is not proportional to the initial investments by the angel investor and the entrepreneur. The simulation results show that the continued investment by the entrepreneur and the private benefit acquired by the angel investor have a more profoundly negative influence on the angel investor’s share of the exit value of the start-up company. Moreover, the market search structure represented by the matching probability of an angel investor to an entrepreneur has a more significant impact on the angel investor’s share than the other model parameters.

Originality/value

The importance of market search friction in the very early-stage financing market is emphasized. The concepts of continued investments and private benefits are introduced and quantified for the first time under the framework of angel investment. The impacts of such model parameters as the matching probability of an angel investor to an entrepreneur, the success rate of a start-up company, the bargaining power of an angel investor and the discount rate on the allocation of the exit value of the start-up company are investigated as well.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 23 September 2013

Ethel Brundin and Veronika Gustafsson

The purpose of this paper is to investigate entrepreneurs’ investment decisions under uncertainty in continued investments where the authors test the role of emotions to…

Abstract

Purpose

The purpose of this paper is to investigate entrepreneurs’ investment decisions under uncertainty in continued investments where the authors test the role of emotions to continue or discontinue the investment.

Design/methodology/approach

A conjoint analysis is carried out on 101 entrepreneurs’ 3,232 investment decisions. The entrepreneurs were provided with a scenario of an investment where the dependent variable was the entrepreneur's propensity to allocate further resources to the described investment. They assessed their willingness to allocate further resources to the investment on a seven-point Likert-type scale. The independent variables in the experiment were the experienced emotions of the entrepreneur each of which was described by the two levels of high and low.

Findings

It was found that self-confidence, challenge, and hope increase the propensity to continue investments as do increased level of uncertainty. Embarrassment and strain do not increase this propensity, however, high uncertainty decreases the propensity to continue investments. In contrast to the escalation of commitment theory, embarrassment does not make entrepreneurs more prone to invest under uncertainty. Frustration does not yield significant results, which runs contrary to the theory and the hypothesis finds no support.

Research limitations/implications

The paper focussed on a limited number of emotions, and also on one specific moderating factor that impacts the effect of these emotions on the investment decision.

Practical implications

To understand the role of their emotions in investment decisions under different levels of uncertainty may help entrepreneurs to improve the quality of their decision making.

Originality/value

This study is an experiment where practitioner entrepreneurs participate which increases the ecological validity of the study. Emotions can explain, partly, why entrepreneurs persist with some underperforming projects, but not others. Uncertainty is a powerful moderating variable in the decision-making process. The results enhance existing knowledge about the emotive side of entrepreneurs’ propensity to make investment decisions under uncertainty. The results also supplement and refine existing theories on self-justification.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 19 no. 6
Type: Research Article
ISSN: 1355-2554

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Article
Publication date: 16 April 2018

Liz Warren, Martin Quinn and Gerhard Kristandl

This paper aims to explore the increasing role of financialisation on investment decisions in the power generation industry in Great Britain (GB). Such decisions affect…

Abstract

Purpose

This paper aims to explore the increasing role of financialisation on investment decisions in the power generation industry in Great Britain (GB). Such decisions affect society, and the relative role of financialisation in these macro-levels decisions has not been explored from a historical perspective.

Design/methodology/approach

The paper draws on historical material and interview data. Specifically, we use an approach inspired by institutional sociology drawing on elements of Scott’s (2014) pillars of institutions. Applying concepts stemming from regulative and normative pressures, we explore changes in investments over the analysis period to determine forces which institutionalised practices – such as accounting – into investment in power generation.

Findings

Investments in electricity generation have different levels of public and private participation. However, the common logics that underpin such investment practices provide an important understanding of political-economics and institutional change in the UK. Thus, the heightened use of accounting in investment has been, to some extent, a contributory factor to the power supply problems now faced by the British public.

Originality/value

This paper contributes to prior literature on the effects of financialisation on society, adding power generation/energy supply to the many societal level issues already explored. It also provides brief but unique insights into the changing nature of the role of accounting in an industry sector over an extended timeframe.

Details

Qualitative Research in Accounting & Management, vol. 15 no. 1
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 23 July 2020

Kamla Ali Al-Busaidi and Saeed Al-Muharrami

The national and global digital transformation makes investments in information and communications technology (ICT) by financial institutions a necessity, not only for…

Abstract

Purpose

The national and global digital transformation makes investments in information and communications technology (ICT) by financial institutions a necessity, not only for gaining a competitive advantage but also for expanding their knowledge and learning about their customers. This study assesses the business value of ICT investments by financial institutions using a mixed-method approach.

Design/methodology/approach

This study adopted a mixed-method approach. First, financial data were gathered from Omani banks' annual financial reports and through a longitudinal quantitative analysis in order to assess the value of ICT in financial institutions' profitability performances. Second, a Delphi qualitative approach was utilized in order to further assess how top managers view the impact of ICT investments in different aspects of business. We used an extended balanced scorecard (finance, customer, internal process and learning and growth) and a sector perspective to address how future ICT investments can offer value that goes beyond traditional metrics of profitability.

Findings

The results of the longitudinal study demonstrated significant evidence of the impact of ICT investment on finance performance indicators; ICT value is significantly positive. Furthermore, the results indicated that there is an acceptable consensus among business and ICT managers that ICT is linked to performance indicators beyond financial; ICT value is linked also to customer indicators, internal process indicators and learning and growth indicators in addition to sector indicators.

Originality/value

ICT is vital for a diversified and knowledge-based economy, especially for developing countries, because modern banking and financial institutions are relatively new in economies such as those that had previously relied on cash and informal financing institutions. Therefore, continued ICT investments face challenges and may not succeed. Most of the existing literature on ICT value has focused on tangible financial performance indicators. The financial evaluation of intangible performance indicators of ICT investments still remains a problematic area of high relevance to decision-makers. The present study provides an integrated assessment that enables financial institutions to develop their strategies and assessments in terms of ICT investments and to go beyond typical, tangible financial profitability indicators. Furthermore, it integrates assessment indicators that are beyond organizations themselves and reaches sectors and countries. This type of investigation is limited in the literature yet important for the financial sector as it is highly integrated by nature and critical to the development of a nation's economy.

Details

Journal of Enterprise Information Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0398

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Article
Publication date: 29 November 2018

Dewan Md Zahurul Islam

Economic growth is defined as growth in the capacity to meet individual and collective consumption demands. Decline in economic growth for a longer period (i.e. recession…

Abstract

Purpose

Economic growth is defined as growth in the capacity to meet individual and collective consumption demands. Decline in economic growth for a longer period (i.e. recession) occurs as a part of the “The Limits of Growth” concept. During such an economic crisis, three policy concepts can be implemented: “austerity”; “business as usual”; and “fiscal stimulus”. The purpose of this paper is to examine the economic response to the 2008 recession, in the area of sustainable transport system development, in Europe.

Design/methodology/approach

The study assesses and identifies the need for investments in transport infrastructure, in particular rail, to remove barriers to developing a sustainable multimodal transport system. Towards this, by analysing secondary data collected from relevant online sources, the paper explores the prospects for sustainable rail freight transport development in Europe, during the recession period. For this, eight EU countries were selected, based on the length of railway lines in use: France, Germany, Italy, Poland, Romania, Spain, Sweden and the UK.

Findings

Investment in five transport infrastructures were examined – road, rail, IWT, maritime ports and airports – and the research finds that overall, the “austerity” policy was implemented for investment in rail infrastructure, whereas a modest “stimulus” policy can be observed for investment in road infrastructure. The average investment in IWT infrastructure had a “stimulus” policy, whereas the average investment in Maritime port and Airport infrastructure suggests a “business as usual” policy. Of the various approaches taken in the recent recession period, European rail transport appears to have fared least well.

Research limitations/implications

To some extent, the research is limited by lack of some data (e.g. data unavailability on the UK airport infrastructure investment from year 2006).

Practical implications

The findings of the research will encourage policy makers in national government to invest in sustainable transport infrastructure.

Originality/value

The study suggests that there is a lack of uniform policy response to the recession, in terms of investment in transport infrastructure, and that there is a significant difference between the policy goals set by the EU – modal shift from road to rail and/ IWT to develop a sustainable transport system – and their practice. The author argues for an integrative, common and action-oriented approach to sustainable rail freight system development, by European countries, to develop effective, Europe-wide rail freight corridors, under schemes such as Horizon 2020 and Shift2Rail.

Details

Benchmarking: An International Journal, vol. 25 no. 8
Type: Research Article
ISSN: 1463-5771

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Article
Publication date: 27 May 2014

Dmitri G. Markovitch, Dongling Huang, Lois Peters, B.V. Phani, Deepu Philip and William Tracy

– The purpose of this paper is to investigate commitment escalation tendencies and magnitude in groups of entrepreneurship-minded decision makers.

Abstract

Purpose

The purpose of this paper is to investigate commitment escalation tendencies and magnitude in groups of entrepreneurship-minded decision makers.

Design/methodology/approach

The paper uses a software-based management simulation to expose 447 graduate business students in the USA and India to research stimuli under conditions that resemble important aspects of entrepreneurs’ business environment, such as a focus on overall firm performance. Unlike most previous escalation research that studied individuals, the primary unit of analysis is a three-person group.

Findings

The paper demonstrates a positive relationship between the groups’ entrepreneurial intentions and escalation magnitude. The paper also finds a direct relationship between sunk costs and subsequent investment amounts, suggesting an additional route through which sunk costs may impact escalation behavior – anchoring and insufficient adjustment.

Practical implications

The authors hope that the findings will stimulate further research on commitment escalation modalities and mechanisms among entrepreneurship-minded decision makers and provide impetus for efforts to develop effective debiasing strategies.

Originality/value

The study addresses a long-standing gap in entrepreneurship research, by demonstrating a significant positive relationship between entrepreneurial intentions and escalation behaviors. Also noteworthy, the results are generated using a different research method (simulation) than the experimental approach used in most extant escalation research. As such, the exploration provides important triangulating evidence that is currently lacking from the rich escalation literature.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 20 no. 4
Type: Research Article
ISSN: 1355-2554

Keywords

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Book part
Publication date: 8 November 2017

Alan Murie

This chapter addresses housing policy in England since 2007 and changes in housing opportunities and inequalities. The credit crunch and its aftermath were experienced…

Abstract

This chapter addresses housing policy in England since 2007 and changes in housing opportunities and inequalities. The credit crunch and its aftermath were experienced across the United Kingdom, and speeded the established trend to greater inequality. Many problems identified in England are relevant elsewhere, but the distinctive housing policies adopted in Scotland, Wales and Northern Ireland are not discussed here. The chapter argues that the policy direction adopted since 2010 failed in its ambition to increase housing supply and home ownership and further increased social and spatial inequalities.

Details

Inequalities in the UK
Type: Book
ISBN: 978-1-78714-479-8

Keywords

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Abstract

Details

Further Documents from the History of Economic Thought
Type: Book
ISBN: 978-1-84950-493-5

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Article
Publication date: 1 June 2004

Examines Laughlin Currie's experiences in helping to implement the New Deal, a new monetary system of Roosevelt's administration implemented during the 1930s.

Abstract

Examines Laughlin Currie's experiences in helping to implement the New Deal, a new monetary system of Roosevelt's administration implemented during the 1930s.

Details

Journal of Economic Studies, vol. 31 no. 3/4
Type: Research Article
ISSN: 0144-3585

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Book part
Publication date: 13 November 2006

Tracy S. Manly, Deborah W. Thomas and Craig T. Schulman

This paper investigates whether tax incentives can effectively promote capital investment and research spending simultaneously. Tax history provides the experimental…

Abstract

This paper investigates whether tax incentives can effectively promote capital investment and research spending simultaneously. Tax history provides the experimental setting to compare the influences of these tax initiatives. Analysis shows that firms respond to the research tax incentives by increasing R&D spending but do not significantly react to the policies promoting greater capital investment. More importantly, the results indicate that the tax incentives are negatively related to other types of investment with reduced R&D spending in the presence of incentives for capital investment and capital expenditures decreasing when research is encouraged by tax policy.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-84950-464-5

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