The Entrepreneur's Choice between Private and Public Ownership

Arnoud W. A. Boot · Radhakrishnan Gopalan · Anjan V. Thakor

244 citations0/0 files storedThe Journal of Finance

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Financial Markets and Investment Strategies Private Equity and Venture Capital

Abstract

ABSTRACT We analyze an entrepreneur/manager's choice between private and public ownership. The manager needs decision‐making autonomy to optimally manage the firm and thus trades off an endogenized control preference against the higher cost of capital accompanying greater managerial autonomy. Investors need liquid ownership stakes. Public capital markets provide liquidity, but stipulate corporate governance that imposes generic exogenous controls, so the manager may not attain the desired trade‐off between autonomy and the cost of capital. In contrast, private ownership provides the desired trade‐off through precisely calibrated contracting, but creates illiquid ownership. Exploring this tension generates new predictions.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 244 citations exist upstream.

References

1986Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers 2003Corporate Governance and Equity Prices 1995Firms, Contracts, and Financial Structure 1997Formal and Real Authority in Organizations 1989Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior 1976Agreeing to Disagree 1992An Incomplete Contracts Approach to Financial Contracting 1998Why Do Companies Go Public? An Empirical Analysis

Cited by

2010On the origin of shared beliefs (and corporate culture)2010Culture Clash: The Costs and Benefits of Homogeneity 2020The Deregulation of the Private Equity Markets and the Decline in IPOs 2013Entrepreneurial Exits and Innovation 2007Relationship Banking, Fragility, and the Asset-Liability Matching Problem 2011Data envelopment analysis for environmental assessment: Comparison between public and private ownership in petroleum industry

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.