The Design and Valuation of Financing Contract Under Information Asymmetry
碩士 === 國立臺灣大學 === 財務金融學研究所 === 90 === In this article we discuss the problem of information asymmetry between money demanders and capital lenders, which causes the stagnation of fund raising activities and obstructs security market processing. With a financing contract that changes the co...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Others |
| Language: | en_US |
| Published: |
2002
|
| Online Access: | http://ndltd.ncl.edu.tw/handle/54056429927255710888 |
| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 90 === In this article we discuss the problem of information asymmetry between money demanders and capital lenders, which causes the stagnation of fund raising activities and obstructs security market processing. With a financing contract that changes the conversion ratio according to the performance of a certain period, information asymmetry can be decrease. We develop a price model for the financing contract by integrating the CB pricing model of trinomial tree structure with an algorithm on reset option. Default risk is also taken into account. For the private companies without public stock prices, we employ EPS and P/E ratio to estimate the conversion value.
A workable financing contract is introduced in the article. The result has stable convergence and calculation efficiency. The financing contract can be generalized from the fund raising between venture capitals and start-up high-tech firms to that between banks and SMEs. This contract will help borrowers raising fund with fair price and capital lenders being relieved of loss that results from adverse selection
|
|---|