全球智库信息集成服务系统(G2TT): DP7750 Incentives to Innovate and the Decision to Go Public or Private

G2TT

来源类型	Discussion paper
规范类型	论文
来源ID	DP7750
	DP7750 Incentives to Innovate and the Decision to Go Public or Private
	Daniel Ferreira; Gustavo Manso; André Silva
发表日期	2010-03-21
出版年	2010
语种	英语
摘要	We model the impact of public and private ownership structures on firms' incentives to choose innovative projects. Innovation requires the exploration of new ideas with potential advantages but unknown probability of success. We show that it is optimal to go public when firms wish to exploit the current technology and to go private when firms wish to explore new ideas. This result follows from the fact that privately-held firms are less transparent to outside investors than publicly-held firms. In private firms, insiders can time the market by choosing an early exit strategy when they learn bad news. This option makes insiders more tolerant of failures and thus more inclined to choose innovative projects. In public firms, an early exit strategy is less valuable because there is less information asymmetry about cash flows. In such firms, prices of publicly-traded securities react quickly to good news, providing insiders with incentives to choose conventional but safer projects in order to cash in early when good news arrive. Extensions to the model allow us to incorporate other drivers of the decision to go public or private, such as liquidity and cost of capital. Our model rationalizes recent evidence linking private equity to innovation and creative destruction and also generates new predictions concerning the determinants of going public and going private decisions.
主题	Financial Economics
关键词	Going public Innovation Private equity
URL	https://cepr.org/publications/dp7750
来源智库	Centre for Economic Policy Research (United Kingdom)
资源类型	智库出版物
条目标识符	http://119.78.100.153/handle/2XGU8XDN/536586
推荐引用方式 GB/T 7714	Daniel Ferreira,Gustavo Manso,André Silva. DP7750 Incentives to Innovate and the Decision to Go Public or Private. 2010.