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  • HKW_2019

    Rights statement: Copyright 2020 American Economic Association. All rights reserved

    Accepted author manuscript, 1.26 MB, PDF document

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Raising Capital from Heterogeneous Investors

Research output: Contribution to Journal/Magazine › Journal article › peer-review

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Raising Capital from Heterogeneous Investors. / Halac, Marina; Kremer, Ilan; Winter, Eyal.
In: The American Economic Review, Vol. 110, No. 3, 01.03.2020, p. 889-921.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Halac, M, Kremer, I & Winter, E 2020, 'Raising Capital from Heterogeneous Investors', The American Economic Review, vol. 110, no. 3, pp. 889-921. https://doi.org/10.1257/aer.20190234

APA

Halac, M., Kremer, I., & Winter, E. (2020). Raising Capital from Heterogeneous Investors. The American Economic Review, 110(3), 889-921. https://doi.org/10.1257/aer.20190234

Vancouver

Halac M, Kremer I, Winter E. Raising Capital from Heterogeneous Investors. The American Economic Review. 2020 Mar 1;110(3):889-921. doi: 10.1257/aer.20190234

Author

Halac, Marina ; Kremer, Ilan ; Winter, Eyal. / Raising Capital from Heterogeneous Investors. In: The American Economic Review. 2020 ; Vol. 110, No. 3. pp. 889-921.

Bibtex

@article{d2f62507576944cdb6157cfa60e36fc3,
title = "Raising Capital from Heterogeneous Investors",
abstract = "A firm raises capital from multiple investors to fund a project. The project succeeds only if the capital raised exceeds a stochastic threshold, and the firm offers payments contingent on success. We study the firm's optimal unique-implementation scheme, namely the scheme that guarantees the firm the maximum payoff. This scheme treats investors differently based on size. We show that if the distribution of the investment threshold is log-concave, larger investors receive higher net returns than smaller investors. Moreover, higher dispersion in investor size increases the firm's payoff. Our analysis highlights strategic risk as an important potential driver of inequality.",
author = "Marina Halac and Ilan Kremer and Eyal Winter",
note = "Copyright 2020 American Economic Association. All rights reserved",
year = "2020",
month = mar,
day = "1",
doi = "10.1257/aer.20190234",
language = "English",
volume = "110",
pages = "889--921",
journal = "The American Economic Review",
issn = "0002-8282",
publisher = "American Economic Association",
number = "3",

}

RIS

TY - JOUR

T1 - Raising Capital from Heterogeneous Investors

AU - Halac, Marina

AU - Kremer, Ilan

AU - Winter, Eyal

N1 - Copyright 2020 American Economic Association. All rights reserved

PY - 2020/3/1

Y1 - 2020/3/1

N2 - A firm raises capital from multiple investors to fund a project. The project succeeds only if the capital raised exceeds a stochastic threshold, and the firm offers payments contingent on success. We study the firm's optimal unique-implementation scheme, namely the scheme that guarantees the firm the maximum payoff. This scheme treats investors differently based on size. We show that if the distribution of the investment threshold is log-concave, larger investors receive higher net returns than smaller investors. Moreover, higher dispersion in investor size increases the firm's payoff. Our analysis highlights strategic risk as an important potential driver of inequality.

AB - A firm raises capital from multiple investors to fund a project. The project succeeds only if the capital raised exceeds a stochastic threshold, and the firm offers payments contingent on success. We study the firm's optimal unique-implementation scheme, namely the scheme that guarantees the firm the maximum payoff. This scheme treats investors differently based on size. We show that if the distribution of the investment threshold is log-concave, larger investors receive higher net returns than smaller investors. Moreover, higher dispersion in investor size increases the firm's payoff. Our analysis highlights strategic risk as an important potential driver of inequality.

U2 - 10.1257/aer.20190234

DO - 10.1257/aer.20190234

M3 - Journal article

VL - 110

SP - 889

EP - 921

JO - The American Economic Review

JF - The American Economic Review

SN - 0002-8282

IS - 3

ER -