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Business Creation and the Stock Market

  • Michelacci, C.
  • Suarez, J.

We claim that the stock market encourages business creation, innovation, and growth by allowing the recycling of "informed capital". Due to incentive and information problems, new start-ups face high flotation costs. Sustaining a tight relationship with a monitor allows them to postpone their going public decision until profitability prospects are clearer of incentive problems are less severe.

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Paper provided by Centro de Estudios Monetarios Y Financieros- in its series Papers with number 0009.

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Length: 41 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:cemfdt:0009
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Centro de Estudios Monetarios Y Financieros. Casado del Alisal, 5-28014 Madrid, Spain.

Phone: 914290551
Fax: 914291056
Web page: http://www.cemfi.es/
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