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1 – 10 of over 72000Lydia Nyankom Takyi and Vannie Naidoo
This study aims to explore how the implementation of the recapitalisation by the Bank of Ghana disrupted the indigenous banks’ sources of accessing capital to raise the required…
Abstract
Purpose
This study aims to explore how the implementation of the recapitalisation by the Bank of Ghana disrupted the indigenous banks’ sources of accessing capital to raise the required amount within the mandatory stipulated time/deadline.
Design/methodology/approach
This study used purposive sampling techniques to interview key role players and senior members involved in the bank’s recapitalisation process and/or have in-depth information on the 2017–2018 recapitalisation period.
Findings
This study revealed that government directives significantly shape banks regulations and strategy; accordingly, any state-directed policies must be communicated cautiously, well explained and implemented to reduce any negative consequences.
Originality/value
This study makes a significant contribution to knowledge by exploring how directives (arbitrary) of regulatory bodies can influence the business as well as its other stakeholders (such as the depositors, public, among others). Secondly, the study highlights how the delays in government support may not derive the benefits expected by the regulator.
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Marco Talaia, Alessia Pisoni and Alberto Onetti
– The purpose of this paper is to identify the factors that influence the fund raising ability of innovative new ventures/startups.
Abstract
Purpose
The purpose of this paper is to identify the factors that influence the fund raising ability of innovative new ventures/startups.
Design/methodology/approach
The authors investigate a data set composed of 108 Italian innovative new ventures. Specifically, the authors run a Tobit regression model linking the amount of equity raised by the company to the human capital of the company. The authors focussed the analysis on the Chief Executive Officer (CEO) of the new company, who usually is a founder and, in the early stages, the most charismatic figure.
Findings
The analysis shows a significant relationship between the ability of a startup to raise funds and the level of education of the CEO. The findings suggest that this causal relation is even stronger as the CEO holds an MBA.
Research limitations/implications
The results of our empirical study provide further insights about the characteristics of the CEO that mostly impact on fund raising ability of the new ventures. The results are limited to startups founded by Italian entrepreneurs. A cross-country comparison will represent the natural prosecution of our research.
Practical implications
The study provides important implications for researchers and practitioners who are interested in understanding the fundamentals of the fund raising process for innovative startups. Moreover, these findings may also be helpful for policy makers in better understanding the factors potentially influencing the Italian startup ecosystem.
Originality/value
The paper sheds light on the factors affecting the fund raising process of innovative new ventures in the early stage of the company’s life cycle. Specifically, it is one of the few study focussing on the profile/background of the CEO in early-stage companies.
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Ho Wook Shin, Seung-Hyun (Sean) Lee and Min-Jung Lee
The purpose of this study is to examine how the liability of foreignness (LOF), choice of incorporation and an institutional change independently and jointly affect a reverse…
Abstract
Purpose
The purpose of this study is to examine how the liability of foreignness (LOF), choice of incorporation and an institutional change independently and jointly affect a reverse merger (RM) firm’s capital-raising performance.
Design/methodology/approach
The study draws on the data of shell reverse merger transactions in the USA from 2007 to 2016.
Findings
This paper finds that LOF and the choice of incorporation as a signal have a significant effect on RM firms’ capital-raising performance. In addition, this study finds that the effectiveness of the signaling can be affected by LOF. Finally, this paper finds that an institutional change that lowers the entry barrier to the initial public offering (which is a superior alternate to an RM) affects the impacts of LOF and signaling on RM firms’ capital-raising performance.
Originality/value
The study contributes to the international business literature by examining the RM (which has been an under-researched topic in the literature) by drawing on the LOF framework. The study finds that LOF and the choice of state for incorporation affect RM firms’ capital-raising performance; moreover, these relationships are affected by an institutional change.
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Mohammad Hashemi Joo, Yuka Nishikawa and Krishnan Dandapani
The purpose of this paper is to recognize the benefits of the initial coin offering (ICO) as a way of raising funds and to present a detailed comparison between the ICO and the…
Abstract
Purpose
The purpose of this paper is to recognize the benefits of the initial coin offering (ICO) as a way of raising funds and to present a detailed comparison between the ICO and the initial public offering to realize the future possibilities that this new funding method holds.
Design/methodology/approach
It is an exhaustive review of the ICO, the mechanism of crowdfunding, the blockchain technology behind it, benefits and current shortcomings of the ICO, and the potential future development of the ICO as a convenient and efficient way of raising capital.
Findings
ICOs have brought billions of dollars of funding to startups and projects worldwide in less than two years. Concurrently, many successful ICOs yielded extremely high returns to investors and believers of this new way of funding businesses.
Research limitations/implications
While the ICO is a revolutionary vehicle for business funding, it has raised concerns among users as well as potential investors about its risk and lack of regulation. The future of this innovative funding method highly depends on further development and placement of appropriate regulatory supervision, better understanding of risk and benefits and attaining the confidence of users.
Originality/value
This is a review of the advantages and drawbacks of the ICO. If the current fraud, market and cybersecurity risks can be mitigated and standardized regulations are developed, the ICO has a future to become an established way of capital funding or even replace the existing options, regardless of the size and age of companies.
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This is the first REIT paper to seek to empirically examine potential influencing factors on the discounts and underwriting fees of Australian REIT rights issues.
Abstract
Purpose
This is the first REIT paper to seek to empirically examine potential influencing factors on the discounts and underwriting fees of Australian REIT rights issues.
Design/methodology/approach
Using a methodology similar to Owen and Suchard, and Armitage, a sample of 62 A‐REIT rights issues during 2001‐2009 is analyzed. A variety of potential factors influencing discounts and underwriting fees are explored.
Findings
Over A$20 billion was raised by A‐REIT rights issues during 2001‐2009 (this around three times that raised through A‐REIT initial public offerings during the same period). The mean offer price was discounted around 9.5 percent from the current market price and underwriting fees averaged 2.9 percent of gross proceeds raised – both substantially less than for industrial rights issues. The standard deviation of daily returns for the past year appears to influence the percentage discount offered to subscribers. This volatility was particularly noticeable in 2008 and 2009, during the global financial crisis, where new issues were discounted substantially so as to raise equity to repay debt. This historical risk variable appears paramount in determining the discounts to subscribers and fees to underwriters.
Practical implications
A‐REITs seeking to minimize the discounts offered to subscribers and to minimize their underwriting costs with rights issue equity capital raisings must first minimize their share price volatility.
Originality/value
This paper adds to the international costs of capital raising literature of REITs by examining such costs with A‐REIT rights issues and is the first paper to examine factors influencing these costs.
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Elena Alexandra Mamouni Limnios, John Watson, Tim Mazzarol and Geoffrey N. Soutar
A key issue faced by co-operative enterprises is how to raise external equity capital without compromising member control. The purpose of this study is to examine the potential of…
Abstract
Purpose
A key issue faced by co-operative enterprises is how to raise external equity capital without compromising member control. The purpose of this study is to examine the potential of a special type of financial instrument called a Cooperative Capital Unit (CCU) introduced into the Australian legislation to facilitate external investment while maintaining member control.
Design/methodology/approach
A Delphi panel and six focus groups were used to provide an understanding of the challenges associated with cooperative governance and financing and to aid the development of a conceptual framework for the implementation of CCUs.
Findings
The findings from these Delphi panel and six focus groups were used to develop a proposed framework that the authors believe will be useful in structuring equity-like instruments depending on the purposes they might serve. In particular, the authors propose a new form of cooperative ownership and equity structure that could: better align member and investor interests; provide a mechanism to strengthen one role over the other depending on the needs of the cooperative; and provide investors with a better sense of security while retaining member control.
Originality/value
To the best of the authors’ knowledge, the cooperative ownership and equity structure proposed in this study are novel and not currently found in theory or practice. The insights provided by this study should, therefore, be of interest to a wide range of stakeholders, including cooperatives; professional advisors to these businesses; government regulators; investors; and researchers.
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Each company, large or small, starts with a dream and an idea for a new product or service. Companies can succeed or fail for a wide variety of reasons, including inexperienced…
Abstract
Each company, large or small, starts with a dream and an idea for a new product or service. Companies can succeed or fail for a wide variety of reasons, including inexperienced managers, failure to build or sell the desired product, launching products into highly competitive environments, and a lack of capital. This chapter reviews the traditional methods of capital formation, including funding by angel investors and venture capital firms. These funding methods are only available to relatively large firms, leaving millions of small firms without reliable debt and equity funding sources to scale their business. The growth of the internet, blockchain technology, and fintech firms has introduced innovative funding methods, such as crowdfunding and Initial Coin Offerings (ICOs). While these structures have been successful in raising capital for smaller firms, changes in the regulatory environment, such as the JOBS Act, are needed for these new forms of capital formation to reach their full potential.
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Paul D. Broude and Joseph E. Levangie
Most entrepreneurs are continually concerned about their finances. Their companies perhaps not yet profitable, they may have a fear of “running out of dry powder.” These…
Abstract
Most entrepreneurs are continually concerned about their finances. Their companies perhaps not yet profitable, they may have a fear of “running out of dry powder.” These entrepreneurs often have fallen in love with their company's technologies, products, and potential markets, but they require more resources. Invariably these emerging ventures shroud their fear of the grueling capital raising marathon by presenting voluminous business plans to potential investors. They often flaunt their “optimized business models.”” Investors, however, typically want to know why the potential investment is such a good deal. The entrepreneur often wants guidance regarding what to say to whom in a changing financing environment.
In this article, our “Practitioner's Corner” associate editor Joe Levangie collaborates with a long-time colleague Paul Broude to address how businesses should “make their capital-raising initiatives happen.” Levangie, a venture advisor and entrepreneur, first worked with Broude, a business and securities attorney, in 1985 when they went to London to pursue financing for an American startup. They successfully survived all-night drafting sessions, late-night clubbing by the company founder, and even skeet shooting and barbequing at the investment banker's country house to achieve the first “Greenfield” flotation by an American company on the Unlisted Securities Market of the London Stock Exchange. To ascertain how the entrepreneur can determine what financing options exist in today's investing climate, read on.
Chuntai Jin, Tianze Li, Steven Xiaofan Zheng and Ke Zhong
The purpose of this paper is to answer the following three questions about the new capital raised in initial public offerings (IPOs): why do some IPO companies raise a lot of new…
Abstract
Purpose
The purpose of this paper is to answer the following three questions about the new capital raised in initial public offerings (IPOs): why do some IPO companies raise a lot of new capital while some others do not? Where do the IPO companies use the new capital they raise in IPOs? How does the use of new capital affect the operating performance of IPO companies?
Design/methodology/approach
Matching firm approach, univariate and regression tests.
Findings
This paper finds that companies with higher research and development (R&D) spending, higher capital expenditure, lower working capital and more long-term debt tend to raise more capital in IPOs. These firms also spend more on R&D and capital expenditure. The results also suggest that the more the new capital firms raise in IPOs, the lower operating performance they have in subsequent years. However, firms spending more new capital on R&D and capital expenditure seem to perform better.
Originality/value
These results help us understand the behavior of IPO firms.
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