Showing papers on "Individual capital published in 1989"

What Managers Think of Capital Structure Theory: A Survey

Abstract: N This survey examines the extent managers use the assumptions and/or inputs of capital structure models generated by academicians in making financing decisions. Modigliani and Miller [14] showed that capital structure decisions do not affect firm value when capital markets are perfect, corporate and personal taxes do not exist, and the firm's financing and investment decisions are independent. However, when one or more of the MM assumptions are relaxed, many authors demonstrate how firm value may vary with changes in the debt-equity mix. Most frequently, the optimal capital structure maximizes firm value by simultaneously minimizing external claims to the cash flow stream flowing from the firm's assets. Such claims include taxes paid to the government by the firm and its security holders; bankruptcy costs paid to accountants, lawyers, and the firm's vendors; and/or agency costs incurred to align managerial interests with the interests of capital suppliers. Until recently, the capital structure debate was mainly a theoretical one, with the relevance or irrelevance of financing decisions turning on the modeler's willingness to accept the existence of significant market imperfections. (See Miller [12], DeAngelo and Masulis [2], Kim [9], Haugen and Senbet [6], Titman [25], Jensen and Meckling [8], Fama [5], and Smith and Warner [22] for different perspectives on the relevance of the market imperfections in the preceding paragraph.) However, empirical evidence, summarized nicely by Smith [21], now strongly indicates that changes in a firm's capital structure can affect firm value. Thus, the We appreciate the many useful comments made by James Ang, Barbara Yerkes, and the referees of this journal.

Capital gains tax policy toward entrepreneurship

Abstract: Presents evidence on the source of funds to the venture capital industry and documents the relatively minor role played by individual investors. Places capital gains on venture investments in context and compares their total value with the value of all realized gains.

Venture Capital and Capital Gains Taxation

Abstract: This paper investigates the links between capital gains taxation and the level of venture capital activity. I examine two explanations of how reducing the personal capital gains tax rate may spur venture capital: the first focuses on the supply of funds to the venture industry, and the second on the supply of entrepreneurs. The supply of funds is unlikely to be the principal mechanism through which the tax affects venture capital, since less than half of venture investors face individual capital gains tax liability on their realized gains. Moreover, most of the growth in venture funding during the last decade has come from tax-exempt investors. Individual capital gains taxes may however have a significant influence on the demand for venture funds. These taxes have an important impact on the incentives of entrepreneurs and other employees of start-up firms who forego wage and salary income and accept compensation through corporate stock and options. The paper closes by noting that reducing the tax rate on all gains is a relatively blunt device for encouraging venture investment. Venture investments account for less than one percent of realized capital gains.

The scale of informal capital markets

Abstract: Informal capital markets are the leading source of external risk capital fueling entrepreneurial startup and small business growth. They are virtually the only practical source of risk or venture-type capital for most entrepreneurs once their capital needs surpass family resources. Informal risk capital is equity and near-equity dollars invested by private individuals directly (informally) in entrepreneurs without formal intermediation.1 The importance of understanding how and where small firms obtain their risk capital is reenforced by the growing recognition of the role of small business in U.S. economic performance.2 Continued and enhanced supply of informal capital requires rational public policy. Because of the lack of reliable empirical data, it has been difficult to formulate effective policies that would guide markets where necessary, leave them alone where desirable, and accelerate their growth where possible. Such policy is best built on an accurate appreciation of the scale of informal risk capital's contribution to U.S. economic growth and change. New microdata evidence just recently available contributes a wealth of empirical data about how informal investors and entrepreneurs interact.3 The object of this paper is to use the new data to reach preliminary estimates of recent aggregate flows of informal capital. To achieve this goal I also provide collateral estimates of the stock of informal investors, recipient firms and annual transactions volume.

Venture Capital and Capital Gains Taxation

Abstract: This paper investigates the links between capital gains taxation and the level of venture capital activity. I examine two explanations of how reducing the personal capital gains tax rate may spur venture capital: the first focuses on the supply of funds to the venture industry, and the second on the supply of entrepreneurs. The supply of funds is unlikely to be the principal mechanism through which the tax affects venture capital, since less than half of venture investors face individual capital gains tax liability on their realized gains. Moreover, most of the growth in venture funding during the last decade has come from tax-exempt investors. Individual capital gains taxes may however have a significant influence on the demand for venture funds. These taxes have an important impact on the incentives of entrepreneurs and other employees of start-up firms who forego wage and salary income and accept compensation through corporate stock and options. The paper closes by noting that reducing the tax rate on all gains is a relatively blunt device for encouraging venture investment. Venture investments account for less than one percent of realized capital gains.

The Consumption Value of Schooling An Empirical Estimate of One Aspect

Abstract: The purpose of this paper is to demonstrate by example that human capital is more than just a capital good in the strictest sense of the term. Certain forms of human capital have consumption value in addition to the value of the increased stream offuture monetary and nonmonetary benefits. A methodfor empirically estimating the consumption value of schooling as a vehicle to avoid the Vietnam War draft is presented.

Externalities, Firm-Specific Capital Investments, and the Legal Treatment of Fundamental Corporate Changes

Abstract: Mergers, hostile takeovers, plant closings, and other fundamental corporate changes cause enormous disruption in the lives of everyone connected with firms that experience such events. Workers, managers, customers, suppliers, and their families are all significantly affected. Philanthropists, rival firms, and local governments also suffer significant disruption. The larger a firm is in relation to the size of the community in which it operates, the greater the disruption any such change is likely to have. So, for example, when the United States Steel Company closed two steel plants in Youngstown, Ohio, it was accurate to note that: Steel has become an institution in the Mahoning Valley .... Everything that has happened in the Mahoning Valley has been happening for many years because of steel. Schools have been built, roads have been built. Expansion that has taken place is because of steel. And to accommodate that industry, lives and destinies of inhabitants of that community were based and planned on the basis of that institution: Steel.'. This Article attempts to develop a framework for thinking about the legal treatment of various groups affected by fundamental corporate changes. In the past, no external actors had a legal right to affect the fate of a corporation, which, acting through its board of directors or shareholders, could dispose of its assets in any way it wished. 2 More recently,

Allocation of educational and occupational opportunities in the Islamic republic of Iran: a case study in the political screening of human capital

Abstract: The Iranian Revolution, while similar to other modem revolutions in many aspects, has resulted in several innovative social policies which have not been pursued as seriously by other revolutionary governments. In this paper we will study one political innovation that has significant consequences for economic development. Taking advantage of its near monopoly on higher education and complete control over public sector employment, the Iranian government has set up a complex system of political screening and filtering for admission to colleges and universities, as well public sector employment.1

The West German Venture Capital Market: An Analysis of its Market Structure and Economic Performance

Abstract: Contents: Overview of standard concepts in industrial organization - political economic review of the German venture capital environment - developmental analysis of the venture capital market structure.

Venture capital and entrepreneurial development

Abstract: Venture capital is a temporary-equity or quasi-equity investment in a growth-oriented, usually small or medium-size business managed by a highly motivated entrepreneur. Management assistance often comes with the investment. For the investment, the investor expects either a minority share in the company or the irrevocable right to acquire it. The paper notes that venture capital cannot be expected to grow in the developing countries at the same pace as it did in its early years of development in the United States and Canada. But there is no reason to believe that conditions cannot be improved so that it can contribute to industrial and entrepreneurial development in the Third World. Governments can create an enabling climate for venture capital by improving the macroeconomic environment, trying to change attitudes about risk and entrepreneurship, improving information and infrastructure, and providing and promoting the availability of venture capital funds.

Cultural Capital in Australia

Abstract: (1989). Cultural Capital in Australia. Discourse: Studies in the Cultural Politics of Education: Vol. 10, No. 1, pp. 53-69.

Capital investment for the future of biomedical research: a university chief financial officer's view.

Abstract: The author explores the subject of capital needs in university biomedical research. Three main topics are covered: the universities' need for capital (which is great and growing fast); the sources of capital for universities (private donations, state and federal governments, institutional funds, and debt); and a review of federal policy, to determine whether the federal government is part of the problem of meeting universities' capital needs or part of the solution. For each topic, important assumptions, questions, and possible future trends and dangers are reviewed. The author calls for the university research community to face the difficult issues he has raised and consolidate their thinking in order to avoid potential dangers and to ensure the health of university science into the 21st century.

The Money Capital Constraint and Decisions in the Firm

Abstract: It is a significant distinguishing feature of the revolution in economic thought that Keynes accomplished — though it has not been maintained in clear perspective in the context of the neo-classical counterrevolution – that economic decisions and performances are generally constrained by the availability of money and its flow through the economy. Against the ’real’ economics of the classical system and its assumedly effective analytical dichotomisation, and against the recrudescence of the primacy of the ’real’ in the neo-classical-monetarist-supply side revival, Keynes reminds us that in a sagging economy