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We examine the evolutionary path of companies' corporate social responsibility (CSR) since their debuts as public companies. We find that firms' average CSR score is rising over the time they are listed in the public capital market. Neither the CSR score change over the age of the firm nor the general trend of CSR over time can explain this pattern. The phenomenon is more likely driven by the number of years the firms have been in the public market. We further find supporting evidence that this pattern of rising CSR since the public listing is more pronounced when the firm is more profitable, holds more cash, has a higher payout ratio, or has more free cash flows. Overall, our findings support the hypothesis that improving CSR performance may not be the priority of most firms new to the public market, but the "public camera effect" is an effective mechanism to assure the growth of CSR assuming the firms remain in the public market.

Modeling the cash flows of private investments is an important challenge for institutional investors. While the Takahashi and Alexander (TA) model for private investment cash flows has stood the test of time, we suggest a small change in the model that makes it more amenable to be deployed in market simulation and scenario analysis. We provide a comparison between the original and modified TA model using cash flow data from Burgiss and show that our change does not detract from the spirit of the TA model but ties it with the public market in an intuitive way. We also provide a regression-based analysis to correlate the growth of public and private markets.

I examine the performance of 936 buyout (BO) funds incepted during 1980−2015 using Generalized Public Market Equivalent (GPME) proposed in Korteweg and Nagel (2016). The statistical inference implemented within the GMM framework suffers from the problem of poor identification. To solve this I introduce a Bayesian estimation step to calculate GPME. Even though, the uncertainty regarding how to choose the public market index for comparison remains. To address the benchmarking challenge I use a pricing kernel tailored specifically to the geographical and industrial characteristics of the fund. On average, BO funds do not show the outperformance after using this newly proposed approach.

Public markets are transparent institutions, where disclosure is mandatory and order flow observable. We show that transparency can lead to insufficient information acquisition and inefficient investment. Our model links a firm's preference for public markets to the quality of disclosure metrics. When short-term signals diverge from the long-run value of a project, entrepreneurs prefer opaque private markets where investors can bargain over the costs of acquiring information. Imperfect communication is a mechanism by which mandatory disclosure may destroy value, leading firms to remain private.

I study venture capital firms’ (VCs) use of public market information and how attention to this information relates to private market investment outcomes. I link web traffic to public filings hosted on EDGAR to individual VCs. VCs analyze public information about industry peers before most deals. An increase in industry filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information, especially for low-reputation VCs. Policymakers should consider spillover effects on private markets when setting public disclosure requirements.

Using unique, hand-gathered data, this paper examines how public news about the target firm released publicly during the private merger negotiation process affects bidding strategies. We provide strong evidence that market reactions to information events during the private sale process have a substantial impact on takeover prices. However, the sensitivity of private bids to target-firm public market returns varies significantly depending on the source of the news. Moreover, bidders are more sensitive to news releases in their first private bids and have lower sensitivity to news released when they make bid revisions after the initial private bid submission. In general, bid responses to positive news are stronger than bid responses to negative news. Overall, our findings provide novel evidence suggesting that the market reactions to the release of information during merger negotiations have important implications for takeover costs.

Historically, an initial public offering (“IPO”) was a process whereby a company sold all of its underlying assets to the public. A new tax innovation, the “tax receivable agreement” (“TRA”), creates private tax benefits in public offerings by allowing pre-IPO owners to effectively keep valuable tax assets for themselves while selling the rest of the company to the public. Prior to 2005, TRAs were almost never used in IPOs. Today they have become commonplace, changing the landscape of the IPO market in ways that are likely to become even more pronounced in the future. This Article traces the history of various iterations of TRAs and shows that a new generation of more aggressive TRAs has recently developed. Although TRAs were historically used only for a small subset of companies with a certain tax profile, the new generation of innovative and aggressive TRAs can be used by virtually any company conducting an IPO, greatly expanding the potential use of TRAs. TRAs have been described by a few critics as “bizarre” and “underhanded,” yet the economic and tax consequences of the different types of TRAs have gone mostly unexplored in the literature. This Article explores whether critics’ comments regarding TRAs have merit, or whether TRAs are simply an efficient contract between pre-IPO owners and public companies. It examines TRAs within the larger landscape of financial transactions, showing that the way TRAs are used in the public market deviates from similar private transactions in ways that are likely detrimental to public shareholders. This Article also shows how the Up-C, a type of IPO transaction where TRAs are most commonly used, allows pre-IPO owners to take money that should be earmarked for public shareholders in undisclosed ways and proposes remedies for this problem.

The creation of real estate investment trusts (REITs) facilitates the conversion of illiquid commercial real estate assets into liquid tradable securities in the public market space. The process increases liquidity and generates significant growth in cross-border real estate transactions. This study uses a large sample of proprietary commercial real estate transactions data from more than 73 countries within the sample period of 2001 through 2015. We investigate the impact of REIT creation on international real estate capital flows. Using non-REIT countries as the control group, we show that REITs open a new channel to attract institutional investments in real estate. New investments in real estate by both local institutional investors and foreign investors increase in REIT countries relative to non-REIT countries. The results imply that there is no substitution effects of REITs on private real estate market activities. We also find no evidence of “crowding out” effects on local investors, as we do not observe significant changes in the outflows of real estate capital. The relatively large increases in domestic real estate investments have caused declines in the shares of cross-border real estate capital flows in the post-REIT regime.

Lack of sufficient capital is sometimes one of the barriers for the development of family firms. In a situation when the company owners do not have the possibility to recapitalize the company, or no possibility of increasing the scale of the use of foreign capital, an important source of funding may become an issue of shares directed to external entities. The article analyzes the activity of family firms in the process of raising capital through the issue of shares on the public market of securities - Stock Exchange and in the alternative trading system – NewConnect market. The analysis was conducted based on data from 2013-2015. In that period the share issues of family firms accounted for 30% of all IPOs on the Warsaw Stock Exchange and 43% on the NewConnect market. The article also examined the phenomenon of stock prices underpricing in the initial public offering. The scale of underpricing in family firms and other companies was compared.

The purpose of this phenomenological study was to highlight the day-to-day experiences and the principal themes depicting the reasons of children to engage in work at an early stage. There were seven informants from Sta. Maria Public Market who underwent in-depth face-to-face interviews. Thematic content analysis was used to treat data through data reduction, data display and conclusion drawing and verification. Several themes emerged. Love for family and need to survive were the themes that came out with regards to the principal causes why children engage in child labor at an early stage. Moreover, low self-esteem and morale, family sustenance and individual agony were some problems encountered by child laborers being a learner in school and at the same time, a normal child of their families. The informants encountered difficulties being child laborers and at the same time, learners of their schools. More so, with the implications presented, child labor will be addressed in the locality, if not totally eradicated from the system.

This report takes a closer look at a crucial aspect of private equity (PE), namely the ability of PE firms to exit from their investments in a manner that crystallizes the value created over the period of their ownership. Specifically, it considers exits from private equity investments in Asia’s two largest emerging markets, China and India. The aim is to increase the transparency of this asset class by providing an overview of the market and trends over time, highlighting differences between China and India, and delving deeper into a sample of detailed data provided by INSEAD's inaugural panel of limited partners (LPs). The report highlights the large number of exits in both markets, we observed about 12502 in this study, and how the speed of established exits (IPOs, M&As) continues to accelerate, thereby boosting investor confidence in Asia’s two largest emerging markets, and fueling the growth of the asset class through fund raising and investing. We show a divergence between the exit channels favoured in China (IPOs) and India (M&As), and how this has impacted overall exit size, as well as the influence of public market cycles on exit timing. As far as possible, given the limitations of a database relying on public data, we attempt to provide some indication of the broader performance of PE exits benchmarked against relevant public market indices. In both China and India we find a lower-than-expected correlation between PE returns and public market returns, pointing to company- and investment-specific factors as the main drivers of performance in these markets. This analysis is complemented with an in-depth look at realised versus unrealised returns, drawing upon data from our LP panel. The report serves as the baseline research for a study that will be updated on an annual basis in the future, offering private equity investors in China and India increasingly valuable insights into the development of a fast-changing asset class.

According to the theory proposed by Acerbi and Scandolo (2008) [Quant. Finance, 2008, 8, 681–692], an asset is described by the so-called Marginal Supply–Demand Curve (MSDC), which is a collection of bid and ask prices according to its trading volumes, and the value of a portfolio is defined in terms of commonly available market data and idiosyncratic portfolio constraints imposed by an investor holding the portfolio. Depending on the constraints, one and the same portfolio could have different values for different investors. As it turns out, within the Acerbi–Scandolo theory, portfolio valuation can be framed as a convex optimization problem. We provide useful MSDC models and show that portfolio valuation can be solved with remarkable accuracy and efficiency.

We set out to understand the size of DLOMs by comparing the subject of the discounts, privately held companies, to the bases from which discounts should be applied. These relevant bases include publicly traded firms considered as guideline public companies and public market benchmarks from which cost of capital data are obtained. We created a database of 1,328 matched pairs and 9,765 matched industry pairs using transactions from 1995 to 2008. Our results indicate that entity-level discounts average between 68 and 70 percent, which are significantly larger than those reported in other databases and from other studies. We believe one of the main reasons our discounts are larger is because we captured, from privately held company transactions data, the actual value associated with the expected probability of a public market liquidity event. In other words, a matched pairs approach allowed us to calculate the discounted value associated with the expected probability of private firms becoming public firms at some point in the future.

The Royal Canadian Mounted Police has been investigating Securities Frauds for almost 40 years. There is a perception that the junior capital markets are rampant with fraud. RCMP investigators are frustrated with their lack of success in protecting the integrity of the public market place. This paper outlines some of the reasons for this ineffectiveness and provides some concrete suggestions for improvement. Comments are supported by quotations from numerous past RCMP stock fraud investigators.

It is well documented that the venture capital industry is highly volatile and that much of this volatility is associated with shifting valuations and activity in public equity markets. This paper examines how changes in public market signals affected venture capital investing between 1975 and 1998. We find that venture capitalists with the most industry experience increase their investments the most when public market signals become more favorable. Their reaction to an increase is greater than the reaction of venture capital organizations with relatively little industry experience and those with considerable experience but in other industries. The increase in investment rates does not affect the success of these transactions adversely to a significant extent. These findings are consistent with the view that venture capitalists rationally respond to attractive investment opportunities signaled by public market shifts.