VGSF - WU Vienna - LC

Jonathan Cohn, University of Texas at Austin, McCombs School of Business

Campus WU D3.0.225 11:00 - 12:15

Organizer VGSF

As part of the ser­ies of the "Fin­ance Re­search Sem­inar", VGSF wel­comes Jonathan Cohn from the Uni­versity of Texas at Austin, Mc­Combs School of Busi­ness to present his re­search pa­per.
Per­sonal Webpage

Pa­per

A Model of In­formed In­ter­me­di­ation in the Mar­ket for Go­ing Pub­lic

We present a model in which in­formed ex­perts in­ter­me­di­ate in the mar­ket for go­ing pub­lic by ac­quir­ing private firms and re­selling their shares to pub­lic in­vestors. Be­cause in­form­a­tion in­cor­por­ated by the pub­lic mar­ket gen­er­ates pri­cing risk for ex­perts, the ac­quis­i­tion prices they pay act as cred­ible sig­nals of firm value. Ac­cord­ingly, in­ter­me­di­ated sales provide a su­per­ior al­tern­at­ive for firms that ex­pect to be un­der­val­ued in tra­di­tional IPOs. We char­ac­ter­ize how sig­nal­ing via the ac­quis­i­tion price af­fects the shar­ing of the sur­plus between the ex­perts and the selling firms. We also ana­lyze the co-ex­ist­ence of in­ter­me­di­ated sales and IPOs and the ef­fi­ciency of the res­ult­ing mar­ket equi­lib­rium. Our ana­lysis of in­ter­me­di­ated sales helps ra­tion­al­ize several design fea­tures of Spe­cial Pur­pose Ac­quis­i­tion Com­pan­ies (SPACs).



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