Publications

Educators

June 2018
Article

Cost of Experimentation and the Evolution of Venture Capital

By: Michael Ewens, Ramana Nanda and Matthew Rhodes-Kropf

We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of VCs in... View Details

Keywords: Innovation; Investing; Abandonment Option; Technological Innovation; Venture Capital; Investment

2017
Working Paper

Cost of Experimentation and the Evolution of Venture Capital

By: Michael Ewens, Ramana Nanda and Matthew Rhodes-Kropf

We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of VCs in... View Details

Keywords: Innovation; Investing; Abandonment Option; Technological Innovation; Venture Capital; Entrepreneurship; Investment

SSRN

23 Jan 2013
Working Paper Summaries

Cost of Capital Dynamics Implied by Firm Fundamentals

Keywords: by Matthew Lyle & Charles C.Y. Wang

April 2001 (Revised September 2001)
Teaching Note

Cost of Capital at Ameritrade TN

By: Mark L. Mitchell and Erik Stafford

Teaching Note for (9-201-046). View Details

Keywords: Financial Services Industry

March 2004 (Revised August 2007)
Supplement

Globalizing the Cost of Capital and Capital Budgeting at AES

By: Mihir A. Desai

Spreadsheet to (9-204-109). Download only. View Details

Keywords: Globalization; Capital Budgeting

December 2015
Case

Nextel Peru: Emerging Market Cost of Capital

By: Luis M. Viceira and Joel L. Heilprin

Educators

January 1975 (Revised March 1988)
Case

Quaker Oats Co.: Cost of Capital (B)

March 1997
Article

Transactions Costs and Capital Structure Choice: Evidence from Financially Distressed Firms

By: S. C. Gilson

This study provides evidence that transactions costs discourage debt reductions by financially distressed firms when they restructure their debt out of court. As a result, these firms remain highly leveraged and one-in-three subsequently experience financial distress.... View Details

Keywords: Cost; Capital Structure; Decision Choices and Conditions; Information; Finance; Business Ventures

Research Summary

Managing Financial Reporting and the Effect on Firms' Costs of Capital

Amy P. Hutton's research investigates the impact of capital market forces and firm contracts on financial reporting and disclosure policies. Specifically, her research examines how managers use financial reporting to convey a firm's strategy, and the effect of... View Details

Article

The Cost of Capital for Alternative Investments

By: Jakub W. Jurek and Erik Stafford

Traditional risk factor models indicate that hedge funds capture pre-fee alphas of 6% to 10% per annum over the period from 1996 to 2012. At the same time, the hedge fund return series is not reliably distinguishable from the returns of mechanical S&P 500 put-writing... View Details

Keywords: Hedge Funds; Required Returns; Downside Risk; Index Options; Investment Funds; Cost of Capital; Investment Return; Risk and Uncertainty; Financial Services Industry

In 2000, Eaton Corporation was broadly diversified industrial conglomerate. But its strategy was evolving and its focus was narrowing around “power management” and more recently on “intelligent power,” the use of digitally enabled products and services designed... View Details

December 2005
Teaching Note

Globalizing the Cost of Capital and Capital Budgeting at AES (TN)

By: Mihir A. Desai and Kathleen Luchs

Keywords: Capital Budgeting; Globalization

25 Mar 1994
Lecture

Canada's Cost of Capital Disadvantage?: Comparative Perspectives

By: W. Carl Kester

Keywords: Capital; Canada

January 1975 (Revised March 1988)
Case

Quaker Oats Co.: Cost of Capital (A)

Article

Do Strict Capital Requirements Raise the Cost of Capital? Bank Regulation, Capital Structure and the Low Risk Anomaly

By: Malcolm Baker and Jeffrey Wurgler

Traditional capital structure theory predicts that reducing banks' leverage reduces the risk and cost of equity but does not change the weighted average cost of capital, and thus the rates for borrowers. We confirm that the equity of better-capitalized banks has lower... View Details

Keywords: Capital Structure; Banks and Banking; Banking Industry