IPOs only offer a partial exit to Venture Capitalists (VCs). When a VC-backed company goes public, the VC typically refrains from selling all shares at the IPO. Due to the high levels of information asymmetry at the IPO, selling a large fraction of the holdings sends a negative signal concerning the company’s valuation. Iliev and… Read More »
Investors may find firms engaged in research and development (R&D) attractive investment opportunities due to their high growth potential. At the same time, R&D is a risky, uncertain process, and the progress of a firm’s R&D activities is difficult for outsiders to assess, resulting in substantial information asymmetry between firms and investors. Firms in the… Read More »
In this blog post, we analyse tokenized deposits in terms of financial motivation, regulation, technological implementation, and interaction with retail and wholesale central bank digital currencies (CBDCs), with particular attention to the European perspective. We conclude that the tokenization of deposits is a crucial enabler for the success of future CBDCs and needs to enter… Read More »
The idea that industrial policy is back in vogue has become something of a cliché in recent years. Joseph Stiglitz, the Nobel Prize winning economist, and Justin Lin, a former Chief Economist of the World Bank, were onto the trend early, arguing in 2015, “today, the relevance and pertinence of industrial policies are acknowledged by… Read More »
Why is it So Costly to Go Public? The average first-day returns to investors of initial public offerings (“IPOs”) in the U.S. is 19%. These returns are even higher elsewhere, such as in China. For reference, the S&P 500 index gains only a few basis points a day on average. While a large one-day return… Read More »
The views expressed in this blog post and the associated paper are solely those of the author and do not necessarily reflect the views of the Federal Reserve Bank of Philadelphia, the Federal Reserve Board, or the Federal Reserve System. Any errors or omissions are the responsibility of the author. No statements here should be… Read More »
The rising disparity between CEO and worker pay over the past few decades has been attracting considerable attention from academics. Over the last two decades, the CEO to median employee pay ratio has been increasing for small (S&P SmallCap 600), medium (S&P MidCap 400), and large (S&P 500) firms. The literature names the managerial rent… Read More »
The past decade has witnessed a revolution in the use of massive amounts of data for businesses’ decision-making. According to a report by Forbes, there were 2.5 quintillion bytes of data created each day in 2018. Most of the time, the volume of data is too great for people to handle. Thanks to the advancement… Read More »
How would our world function if corporate criminal liability ceased to exist? This was the provocative question posed to the participants in the Journal of Corporation Law’s recently published symposium issue on corporate crime. Several of my colleagues argue for or against corporate crime’s end or survey the aftermath of such an implosion. My contribution… Read More »
Venture capital (VC) firms are notoriously secretive. In a recent paper, we examined the causes and consequences of that preference for secrecy using late-2002 court rulings that forced some of the largest public limited partners (LPs) who invest in VC funds to disclose formerly confidential return information. We show that in response to these rulings,… Read More »
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