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dc.contributor.advisorParrino, Robert, 1957-
dc.contributor.advisorFracassi, Cesare
dc.creatorJansen, Mark
dc.date.accessioned2016-10-26T19:29:51Z
dc.date.available2016-10-26T19:29:51Z
dc.date.issued2016-05
dc.date.submittedMay 2016
dc.identifierdoi:10.15781/T2ZC7RW5C
dc.identifier.urihttp://hdl.handle.net/2152/41991
dc.description.abstractThis dissertation examines a financing mechanism that is common in the acquisition of privately-held firms. Using a novel database of transactions in which the target firm is private, this paper shows that sellers receive a debt claim as a contingent payment for the firm that is being sold. The debt claim, which takes the form of seller financing, is secured by the assets of the target firm. I show that proxies for information asymmetry are correlated with the presence of seller financing as payment in the transaction. I also find that when the firm is more likely to have received a financial audit, the transaction is less likely to include seller financing. Since financial audits improve firm transparency, I interpret this as evidence that a reduction in information asymmetries between the parties of a acquisition affect the deal structure. A complementary explanation for the use of seller financing is related to capital constraints faced by buyers in the financing of the transaction. I present evidence that contract structures are affected by cross-sectional and time-series changes in the supply of local investment capital for buyouts. I find that seller financing is less common in areas in which locally informed capital is more abundant. I also find that transactions contain a lower percentage of seller financing in city-years in which Small Business Administration provides loan guarantees for the acquisition and expansion of firm’s loan guarantees are higher. The evidence suggests that seller financing is solving a contracting problem because it is unaffected by controls for local banking activity.
dc.format.mimetypeapplication/pdf
dc.language.isoen
dc.subjectSeller financing
dc.subjectAcquisition
dc.subjectM&A
dc.subjectAdverse selection
dc.subjectInformation asymmetry
dc.subjectModel
dc.subjectTheory
dc.subjectEmpirical
dc.subjectResults
dc.titleHow information asymmetry affects contract design : paying for private firms with IOU's
dc.typeThesis
dc.date.updated2016-10-26T19:29:51Z
dc.contributor.committeeMemberAlmazan, Andres
dc.contributor.committeeMemberHartzell, Jay
dc.contributor.committeeMemberStarks, Laura
dc.contributor.committeeMemberAbrevaya, Jason
dc.description.departmentFinance
thesis.degree.departmentFinance
thesis.degree.disciplineFinance
thesis.degree.grantorThe University of Texas at Austin
thesis.degree.levelDoctoral
thesis.degree.nameDoctor of Philosophy
dc.creator.orcid0000-0002-1558-6468
dc.type.materialtext


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