Incentives to Innovate and the Decision to Go Public or Private

• 成果类型: Article
• 署名作者: Ferreira, Daniel; Manso, Gustavo; Silva, Andre C.
• 署名单位: University of London; London School Economics & Political Science; Centre for Economic Policy Research - UK; University of London; London Business School; University of California System; University of California Berkeley; Universidade Nova de Lisboa
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhs070
• 发表日期: 2014
• 页码: 256
• 关键词: MARKET-EFFICIENCY; CHOICE; OWNERSHIP; equity; INVESTMENT; corporate; buyouts; COSTS; FIRMS

摘要

We model the impact of public and private ownership structures on firms' incentives to invest in innovative projects. We show that it is optimal to go public when exploiting existing ideas and optimal to go private when exploring new ideas. This result derives from the fact that private firms are less transparent to outside investors than are public firms. In private firms, insiders can time the market by choosing an early exit strategy if they receive bad news. This option makes insiders more tolerant of failures and thus more inclined to invest in innovative projects. In contrast, the prices of publicly traded securities react quickly to good news, providing insiders with incentives to choose conventional projects and cash in early.