Financial theory, resource-based theory and access to deal flow are used to explain syndication practices among European venture capital (VC) firms. The desire to share risk and increase portfolio diversification is a more important motive for syndication than the desire to access additional intangible resources or deal flow. Access to resources is, however, more important for non-lead than for lead investors. When resource-based motives are more important, the propensity to syndicate increases. Syndication intensity is higher for young VC firms and for VC firms, specialised in a specific investment stage. Finally, syndication strategies are similar across European countries, but differ from North American strategies.
Bruton, Gary; Manigart, Sophie; Fried, Vance H.; Sapienza, Harry J. (Vlerick Business School, 2002)
This research utilizes an institutional perspective to examine the behavior of venture capital professionals in three distinct regions of the world (Asia, U.S., Europe). Based upon a mail survey, we find reasonably consistent views around the world on the relative importance of various venture capitalist roles. However, we find that how those roles are implemented is shaped by cognitive institutional influences in the given region. We find that a model developed in the U.S. to predict the amount of venture capitalist/CEO interaction is not valid in Asia. Further, Asian boards have much greater insider representation than do U.S. or European boards. We attribute these difference to the greater emphasis in Asia on the importance of collective action.
Manigart, Sophie; De Maeseneire, Wouter (Vlerick Business School, 2003)
This paper investigates initial returns of Easdaq and EuroNM IPOs and explains part of these returns. Average first day return of 300 IPOs introduced before October 1, 1999, is 36.01 %. The most significant explanatory variable is the mean return of previous IPOs, indicating that high initial returns are caused by too high first trading prices due to investor overreaction and positive market sentiment. Riskier IPOs present substantially higher initial returns. Venture capitalists are not able to significantly reduce initial returns, nor does size of the IPO influence initial returns. Our results indicate that high initial returns are caused by underpricing as well as overvaluation. Keywords: underpricing, investor sentiment, IPOs, initial returns
Ooghe, Hubert; De Langhe, Tine; Camerlynck, Jan (Vlerick Business School, 2003)
Few studies have addressed the pre-take-over financial characteristics of multiple versus single acquirers and their targets. Therefore this study investigates whether multiple acquirers, with some experience in acquiring companies, might acquire firms with different (better) financial characteristics than single acquirers. Our results confirm this hypothesis in multiple ways. It seems that multiple acquirers look for complementary firms in terms of sales and growth. Multiple acquirers specifically want to acquire companies with a high sales generating ability in order to improve their own sales generating ability.
Ooghe, Hubert; Heyman, D.; Deloof, Marc (Vlerick Business School, 2003)
Once a firm decides to issue debt, the characteristics of this debt instrument should be considered. One of the critical decisions involves debt maturity. Using a sample of 1091 Belgian small firms from 1996 until 2000, this study analyses the determinants of the corporate debt-maturity structure of small firms in a creditor-oriented system. Consistent with previous empirical evidence on large firms, the present results strongly support the maturity-matching principle. The hypothesis that firms with many growth opportunities will borrow on the short term as a response to the under-investment problem, is not supported. There is a clear relation between the credit worthiness of a firm and the debt-maturity structure. Firms with a better credit score borrow on the long term, whereas firms with a poor credit quality are apparently forced to borrow on the short term. This evidence contradicts the expected U-shaped relationship between credit worthiness and debt maturity. Size negatively influences debt maturity. Keywords: debt maturity, capital structure, small firms
This study tests the validity of the Belgian Ooghe-Joos-De Vos (1991) failure prediction models (1 and 3 years prior to failure) across 18 different industries and different size classes. Firstly, the performance results and the trade-off functions reveal a wide range of performances for the different industries. However, we notice that the OJD models perform best for the classical manufacturing industries and financial services, while they show the worst performance results for the service industries and the no-industry category. Furthermore, when using new, industry specific cut-off points, the error rates of the models are significantly reduced. Secondly, the OJD model 1 year prior to failure seems to perform best for large companies and companies with complete form annual accounts. Finally, the performance differences between the various subgroups with respect to industry, size class and form of annual account of the model 3 years prior to failure the are much smaller than those of the model 1 year prior to failure.
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