Strategic Benefits to Firms Issuing Private Equity Placements

Topics:
Commercial Banking
Tags:
Benefits,
Finance,
Financial Services,
Human Resources,
Investment,
Placement,
Private Equity,
Purdue University
Source:
Purdue University

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Overview: For young technology firms, acquiring resources can often be costly due to the information asymmetry and uncertainty that exist surrounding the new technology. We contend that firms able to issue private equity can better manage their ability to mobilize three kinds of resources: capital, research partners, and commercial partners. We investigate the existence of long-term, strategic benefits to private placements, and a number of factors may determine the long-term effectiveness of this governance form. Overall, the empirical analyses demonstrated that private placements provide long-term benefits to firms by reducing hazards associated with information asymmetry.

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Format: PDF | Size: 215KB | Date: May 2002 | Pages: 42


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