matlab数学建模章节详解corporate finance老师chpt

1、Corporate Finance Ross Westerfield JaffeSixth EditionSixth Edition19Chapter Nineteen Issuing Securities to the PublicExecutive SummaryThis chapter looks at how corporations issue securities to the investing public.The basic procedure for selling debt and equity securities are essentially the same. T

2、his chapter focuses on equity.Chapter Outline19.1 The Public Issue19.2 Alternative Issue Methods19.3 The Cash Offer19.4 The Announcement of New Equity and the Value of the Firm19.5 The Cost of New Issues19.6 Rights19.7 The Rights Puzzle19.8 Shelf Registration19.9 The Private Equity Market19.10 Summa

3、ry and Conclusions19.1 The Public IssueThe Basic ProcedureManagement gets the approval of the Board of Directors.The firm prepares and files a registration statement with the SEC.The SEC studies the registration statement during the waiting period.The firm prepares and files an amended registration

4、statement with the SEC.If everything is copasetic with the SEC, a price is set and a full-fledged selling effort gets underway.The Process of A Public OfferingSteps in Public OfferingTime1. Pre-underwriting conferences2. Registration statements 3. Pricing the issue4. Public offering and sale 5. Mark

5、et stabilization Several months 20-day waiting period Usually on the 20th day After the 20th day 30 days after offeringAn Example of a Tombstone Advertisement19.2 Alternative Issue MethodsThere are two kinds of public issues:The general cash offerThe rights offerAlmost all debt is sold in general ca

6、sh offerings.19.3 The Cash OfferThere are two methods for issuing securities for cash:Firm CommitmentBest EffortsThere are two methods for selecting an underwriterCompetitiveNegotiatedFirm CommitmentUnder a firm commitment underwriting, the investment bank buys the securities outright from the issui

7、ng firm.Obviously, they need to make a profit, so they buy at “wholesale” and try to resell at “retail”.To minimize their risk, the investment bankers combine to form an underwriting syndicate to share the risk and help sell the issue to the public.Best EffortsUnder a best efforts underwriting, the

8、underwriter does not buy the issue from the issuing firm. Instead, the underwriter acts as an agent, receiving a commission for each share sold, and using its “best efforts” to sell the entire issue.This is more common for initial public offerings than for seasoned new issues.19.4 The Announcement o

9、f New Equity and the Value of the FirmThe market value of existing equity drops on the announcement of a new issue of common stock.Reasons includeManagerial InformationSince the managers are the insiders, perhaps they are selling new stock because they think it is overpriced.Debt CapacityIf the mark

10、et infers that the managers are issuing new equity to reduce their debt-equity ratio due to the specter of financial distress the stock price will fall.Falling Earnings19.5 The Cost of New IssuesSpread or underwriting discountOther direct expensesIndirect expensesAbnormal returnsUnderpricingGreen Sh

11、oe OptionThe Costs of Public OfferingsEquityProceeds Direct CostsUnderpricing(in millions)SEOsIPOsIPOs 2 - 9.9913.28%16.96%16.36%10 - 19.998.72%11.63%9.65%20 - 39.996.93%9.70%12.48%40 - 59.995.87%8.72%13.65%60 - 79.995.18%8.20%11.31%80 - 99.994.73%7.91%8.91%100 - 199.994.22%7.06%7.16%200 - 499.993.4

12、7%6.53%5.70%500 and up3.15%5.72%7.53%19.6 RightsIf a preemptive right is contained in the firms articles of incorporation, the firm must offer any new issue of common stock first to existing shareholders.This allows shareholders to maintain their percentage ownership if they so desire.Mechanics of R

13、ights OfferingsThe management of the firm must decide:The exercise price (the price existing shareholders must pay for new shares).How many rights will be required to purchase one new share of stock.These rights have value:Shareholders can either exercise their rights or sell their rights.Rights Off

14、ering ExamplePopular Delusions, Inc. is proposing a rights offering. There are 200,000 shares outstanding trading at $25 each. There will be 10,000 new shares issued at a $20 subscription price.What is the new market value of the firm?What is the ex-rights price?What is the value of a right?Rights O

15、ffering ExampleWhat is the new market value of the firm?There are 200,000 outstanding shares at $25 each.There will be 10,000 new shares issued at a $20 subscription price.Rights Offering ExampleWhat is the ex-rights price?There are 110,000 outstanding shares of a firm with a market value of $5,200,

16、000.Thus the value of an ex-rights share is:Thus the value of a right is $0.2381 = $25 $24.761919.7 The Rights PuzzleOver 90% of new issues are underwritten, even though rights offerings are much cheaper.A few explanations:Underwriters increase the stock price. There is not much evidence for this, b

17、ut it sounds good.The underwriter provides a form of insurance to the issuing firm in a mitment underwriting.The proceeds from underwriting may be available sooner than the proceeds from a rights offering.No one explanation is entirely convincing.19.8 Shelf RegistrationPermits a corporation to regis

18、ter an offering that it reasonably expects to sell within the next two years.Not all companies are allowed shelf registration.Qualifications include:The firm must be rated investment grade.The cannot have recently defaulted on debt.The market capitalization must be $75 m.No recent SEC violations.19.

19、9 The Private Equity MarketThe previous sections of this chapter assumed that a company is big enough, successful enough, and old enough to raise capital in the public equity market.For start-up firms and firms in financial trouble, the public equity market is often not available.Private PlacementsA

20、void the costly procedures associated with the registration requirements that are a part of public issues. The SEC restricts private placement issues ot no more than a couple of dozen knowledgeable investors including institutions such as insurance companies and pension funds.The biggest drawback is

21、 that the securities cannot be easily resold.Venture CapitalThe limited partnership is the dominant form of intermediation in this market.There are four types of suppliers of venture capital:Old-line wealthy families.Private partnerships and corporations.Large industrial or financial corporations ha

22、ve established venture-capital subsidiaries.Individuals, typically with es in excess of $100,000 and newt worth over $1,000,000. Often these “angels” have substantial business experience and are able to tolerate high risks.Stages of FinancingSeed-Money Stage: Small amount of money to prove a concept or develop a product.Start-UpFunds are likely to pay for marketing and product refinement.First-Round FinancingAdditional money to begin sales and manufacturing.Second-Round FinancingFunds earmarked for working capital for a firm that is currently selling its product but sti