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Multi-stage financing and the winner's curse

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Author Info
Archishman Chakraborty () (Department of Economics and Finance, Baruch College, The City University of New York)
Bilge Yilmaz () (Finance Department, The Wharton School, University of Pennsylvania)

Additional information is available for the following registered author(s):

Abstract

Raising cash in multiple stages can lower financing costs for an entrepreneur faced with multiple, differentially informed, strategic investors. By affecting investor incentives to participate in different rounds, the winner's curse problem can be partially alleviated. The results offer insight into the choice of the relative size of an IPO versus a SEO, and into gradual and partial privatization strategies.

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File URL: http://www.economicsbulletin.com/2003/volume4/EB-03D80010A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 4 (2003)
Issue (Month): 32 ()
Pages: 1-8
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:4:y:2003:i:32:p:1-8

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Related research
Keywords: financing costs; information rents; winner's curse;

Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
G3 - Financial Economics - - Corporate Finance and Governance

References listed on IDEAS
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  1. Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 187-212. [Downloadable!] (restricted)
  2. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
    Other versions:
  3. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September. [Downloadable!] (restricted)
    Other versions:
  4. Benveniste, Lawrence M. & Spindt, Paul A., 1989. "How investment bankers determine the offer price and allocation of new issues," Journal of Financial Economics, Elsevier, vol. 24(2), pages 343-361. [Downloadable!] (restricted)
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Statistics
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This page was last updated on 2009-12-12.


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