Yazdipour Advances in Entrepreneurial Finance

With Applications from Behavioral Finance and Economics
1. Auflage 2010
ISBN: 978-1-4419-7527-0
Verlag: Springer US
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 254 Seiten, eBook

Advances in Entrepreneurial Finance brings together contributions from researchers from the fields of entrepreneurship, behavioral finance, psychology, and neuroscience to shed new light on the dynamics of decision making and risk taking by entrepreneurs and venture capitalists (VCs). Every new venture requires access to capital at competitive interest rates, and much has been written on general entrepreneurship by management scholars and financial contracting by financial economists using traditional finance theory with all its highly restrictive assumptions regarding decision makers’ cognitive capabilities and behavior. But recent developments in behavioral finance can now be applied to understand how entrepreneurs and VCs perceive risk and uncertainty and how they decide and act accordingly. Showcasing the latest research, this volume demonstrates that findings from the behavioral and neuroscience arenas can and do explain decision making by entrepreneurs and venture investors in the real world. Consequently, such findings have practical implications not only for entrepreneurs, venture capitalists, and their advisors, but also all government agencies and NGOs that want to support product and technological innovation, capital formation, job creation, and economic development.

Zielgruppe

Research

Autoren/Hrsg.

Yazdipour, Rassoul

Inhaltsverzeichnis

1;Advances in Entrepreneurial Finance;3
1.1;Foreword;5
1.2;Contents;7
1.3;Contributors;9
1.4;Chapter 1: Introduction;11
1.4.1;1.1 Part I: The Theoretical Foundation of Entrepreneurial Finance;12
1.4.2;1.2 Part II: Issues in Financing Start-ups and SMEs;15
1.4.3;1.3 Part III: Issues in Growth and Beyond;17
1.4.4;References;18
1.5;Part I: Theoretical Foundation;19
1.5.1;Chapter 2: A Behavioral Finance Approach to Decision Making in Entrepreneurial Finance;20
1.5.1.1;2.1 Introduction;21
1.5.1.2;2.2 The Entry/Seed Funding Decisions: Problems and Existing Solutions;22
1.5.1.2.1;2.2.1 Central Questions in a Launch Decision;22
1.5.1.2.2;2.2.2 Markets for Venture Capital;23
1.5.1.2.3;2.2.3 Traditional Finance and Economics’ Response to Launch Decisions;23
1.5.1.3;2.3 A Behavioral Approach to Decision Making in Entrepreneurial Finance;24
1.5.1.3.1;2.3.1 Perception Asymmetry;25
1.5.1.3.2;2.3.2 Resident Risks and Behavioral Risks: Toward a Behavioral Risk Model;26
1.5.1.3.2.1;2.3.2.1 Resident Risk: Risk as the “Other Side of a Business Opportunity Coin”;27
1.5.1.3.2.2;2.3.2.2 Determinants of Resident Risk;27
1.5.1.3.2.3;2.3.2.3 Behavioral Risks;28
1.5.1.3.2.4;2.3.2.4 Behavioral Risk Processes;28
1.5.1.3.3;2.3.3 Individual Decision Making in Highly Uncertain Entrepreneurial Settings: A Discussion and Some Final Thoughts;29
1.5.1.4;2.4 Summary and Some Suggestions for Future Research;30
1.5.1.5;2.5 Appendix 1: The Prospect Theory;31
1.5.1.5.1;2.5.1 The Editing or Framing Phase;31
1.5.1.5.2;2.5.2 Editing Operations;32
1.5.1.5.3;2.5.3 The Evaluation Phase;32
1.5.1.6;2.6 Appendix 2: The Affect Heuristic;32
1.5.1.7;2.7 Appendix 3: Other Heuristics and Biases;33
1.5.1.7.1;2.7.1 Representativeness (Similarity);34
1.5.1.7.2;2.7.2 Availability;35
1.5.1.7.3;2.7.3 Anchoring, Adjustment, and Contamination;36
1.5.1.7.4;2.7.4 Overconfidence Heuristics and Calibration;36
1.5.1.7.5;2.7.5 Hindsight Heuristics;37
1.5.1.7.6;2.7.6 Others: Black Swan Phenomenon;37
1.5.1.8;References;38
1.5.2;Chapter 3: Beyond Agency Theory: Value Creation and the Role of Cognition in the Relationship Between Entrepreneurs and Ventur;39
1.5.2.1;3.1 Introduction;39
1.5.2.1.1;3.1.1 Background and Overview;39
1.5.2.2;3.2 Entrepreneurial Ventures and Value Creation in an Agency Setting;41
1.5.2.3;3.3 Cognitive Cost and Cognitive Value Inherent in Entrepreneur–Investor Relations;43
1.5.2.4;3.4 Conditions of Value Creation in Entrepreneur-VC Relationships;46
1.5.2.5;3.5 Conclusion and Implications;49
1.5.2.6;References;50
1.5.3;Chapter 4: Financial Risk Perceptions: A Behavioral Perspective;52
1.5.3.1;4.1 Introduction;52
1.5.3.2;4.2 Neoclassical Financial Risk: A Prequel;53
1.5.3.3;4.3 Fear: The Foundation of Perceived Risk;55
1.5.3.4;4.4 Dual Decision Processes: Thinking and Feeling;58
1.5.3.5;4.5 Risk: For Me or for Others Also?;61
1.5.3.6;4.6 Amplification;62
1.5.3.7;4.7 Implications and Evidence;64
1.5.3.8;4.8 Entrepreneurs: Confirmation About the Risk Perception Process;67
1.5.3.9;4.9 Conclusion;68
1.5.3.10;References;69
1.5.4;Chapter 5: Contribution of Neuroscience to Financial Decision-Making;75
1.5.4.1;5.1 Introduction;76
1.5.4.2;5.2 Overview of Technologies and Methods;77
1.5.4.2.1;5.2.1 Methods;77
1.5.4.3;5.3 Brain Process Involved in Decision-Making;82
1.5.4.3.1;5.3.1 The Unconscious Brain;82
1.5.4.3.2;5.3.2 The Conscious Brain;83
1.5.4.4;5.4 How Decisions Are Made;84
1.5.4.4.1;5.4.1 Do People Act Primarily in Regards to Cognition?;85
1.5.4.4.2;5.4.2 The Interaction of Affect and Cognition;86
1.5.4.4.3;5.4.3 Dopamine: The Neurotransmitter of Reward;88
1.5.4.5;5.5 Looking at the Biases, Errors, and Distortions That Impact Decision-Making;90
1.5.4.6;5.6 Summary and Conclusions;94
1.5.4.7;References;96
1.5.5;Chapter 6: Uncertainty Is Psychologically Uncomfortable: A Theoretic Framework for Studying Judgments and Decision Making Under;99
1.5.5.1;6.1 Introduction;99
1.5.5.2;6.2 Forming a Subjective Problem Representation;101
1.5.5.2.1;6.2.1 Verbal Versus Numeric Probability Labels and the Meaning of “Uncertainty”;104
1.5.5.2.2;6.2.2 Problem Format: Frequency Versus Probability and the Meaning of “Uncertainty”;105
1.5.5.3;6.3 Decision Strategies and Coping with Uncertainty;106
1.5.5.4;6.4 Uncertainty and Psychological Discomfort;108
1.5.5.5;6.5 A Proposed Theoretic Framework for Studying Judgments Under Uncertainty;111
1.5.5.6;6.6 Implications of the Proposed Framework and Some Suggestions for Future Research;113
1.5.5.6.1;6.6.1 Implications for the Subjective Representation of Uncertainty;114
1.5.5.6.2;6.6.2 Implications for Strategy Selection During Decision Making;115
1.5.5.6.3;6.6.3 Implications for Cognitive Versus Affective Components in Decision Making;117
1.5.5.7;6.7 Conclusion;118
1.5.5.8;References;119
1.6;Part II: Issues in Financing Startups and Small Firms;124
1.6.1;Chapter 7: The Changing Landscape of Small-Firm Finance;125
1.6.1.1;7.1 Introduction;125
1.6.1.2;7.2 Time-Series Perspective on Credit Availability and Cost;128
1.6.1.3;7.3 Current Sources of Funding;132
1.6.1.3.1;7.3.1 Start-up Financing;133
1.6.1.3.2;7.3.2 Ongoing Small-Firm Financing;134
1.6.1.4;7.4 Current Issues in Small Firm Financing;136
1.6.1.4.1;7.4.1 Bank Consolidation and Small Firm Finance;136
1.6.1.4.2;7.4.2 Credit Crisis of 2007–2010 and Small Firm Finance;138
1.6.1.5;7.5 Suggestions for Future Research;139
1.6.1.6;7.6 Conclusions;140
1.6.1.7;References;141
1.6.2;Chapter 8: Applications of Behavioral Financeto Entrepreneurs and Venture Capitalists: Decision Making Under Risk and Uncertai;144
1.6.2.1;8.1 Introduction;144
1.6.2.2;8.2 Theoretical Framework;146
1.6.2.3;8.3 Previous Studies;147
1.6.2.4;8.4 Data;149
1.6.2.5;8.5 Research Method;150
1.6.2.5.1;8.5.1 Risk Premiums;150
1.6.2.5.2;8.5.2 Uncertainty Premiums;152
1.6.2.6;8.6 Results;152
1.6.2.6.1;8.6.1 Value and Weighting Functions Under Risk;152
1.6.2.6.2;8.6.2 Risk Premiums;153
1.6.2.6.3;8.6.3 Value and Weighting Functions Under Uncertainty;156
1.6.2.6.4;8.6.4 Uncertainty Premiums;157
1.6.2.6.5;8.6.5 Comparison Between Behavioral PremiumsUnder Risk and Uncertainty;158
1.6.2.7;8.7 Summary and Conclusions;159
1.6.2.8;8.8Appendix 1;161
1.6.2.9;8.9Appendix 2;165
1.6.2.10;8.10 Appendix 3;166
1.6.2.11;8.11Appendix 4;167
1.6.2.12;8.12 Appendix 5;169
1.6.2.13;8.13 Appendix 6;170
1.6.2.14;8.14Appendix 7;172
1.6.2.15;References;173
1.6.3;Chapter 9: Insights into the Psychological Profiles of Entrepreneurs;176
1.6.3.1;9.1 Introduction;176
1.6.3.2;9.2 Analysis;178
1.6.3.2.1;9.2.1 Data;178
1.6.3.2.2;9.2.2 Desire for Control;179
1.6.3.2.3;9.2.3 Social Anxiousness and Self-Monitoring;179
1.6.3.2.4;9.2.4 Affect and Well-Being;180
1.6.3.2.5;9.2.5 Optimism;181
1.6.3.2.6;9.2.6 Demographics and Correlations;181
1.6.3.2.7;9.2.7 Preferences;182
1.6.3.3;9.3 Conclusion;183
1.6.3.4;References;183
1.7;Part III: Issues in Growth and Beyond;185
1.7.1;Chapter 10: Firm Failure Prediction Models: A Critique and a Review of Recent Developments;186
1.7.1.1;10.1 Introduction;186
1.7.1.2;10.2 Classical Statistical Models;188
1.7.1.2.1;10.2.1 Multiple Discriminant Analysis;189
1.7.1.2.2;10.2.2 LOGIT Models, PROBIT Models, and Other Classical Statistical Models;190
1.7.1.2.3;10.2.3 Artificial Intelligence and Expert Systems Approaches;192
1.7.1.3;10.3 Small Firm Failure Prediction Studies;195
1.7.1.3.1;10.3.1 The Early Literature;195
1.7.1.3.2;10.3.2 Impact of Basel II and Recent Small Firm Studies;196
1.7.1.3.3;10.3.3 Existing Research on Small Business Failure;198
1.7.1.4;10.4 Psychological Phenomena as Possible Predictors of Business Success or Failure;199
1.7.1.4.1;10.4.1 The Importance of the Human Decision;199
1.7.1.4.2;10.4.2 The Role of Heuristics;199
1.7.1.4.2.1;10.4.2.1 The Affect Heuristic;200
1.7.1.4.2.2;10.4.2.2 The Representative (Similarity) Heuristic;201
1.7.1.4.2.3;10.4.2.3 The Availability or Recency Heuristic;201
1.7.1.4.2.4;10.4.2.4 Anchoring and Adjustment;202
1.7.1.5;10.5 Summary and Some Suggestions for Future Research;202
1.7.1.6;References;203
1.7.2;Chapter 11: The Evolution of Entrepreneurs and Venture Capitalists;206
1.7.2.1;11.1 Introduction;206
1.7.2.1.1;11.1.1 Background and Overview;206
1.7.2.2;11.2 Normative Model;207
1.7.2.2.1;11.2.1 Uncertainty;207
1.7.2.2.2;11.2.2 Expected Utility Model;207
1.7.2.2.3;11.2.3 Risk Attitude;207
1.7.2.3;11.3 The Evolution of Cognitive Biases;208
1.7.2.3.1;11.3.1 Evolutionary Psychology;208
1.7.2.3.2;11.3.2 Risk Preferences;208
1.7.2.3.3;11.3.3 Overconfidence and Optimism;210
1.7.2.3.4;11.3.4 Representativeness;211
1.7.2.3.5;11.3.5 Availability;211
1.7.2.3.6;11.3.6 Underreaction and Overreaction;212
1.7.2.3.7;11.3.7 Herding;212
1.7.2.4;11.4 The Effect of Cognitive Biases;213
1.7.2.4.1;11.4.1 Entrepreneurs;213
1.7.2.4.2;11.4.2 Venture Capitalists;215
1.7.2.5;11.5 Conclusion and Implications;215
1.7.2.6;References;216
1.7.3;Chapter 12: Statistical Databases for Research on the Financing of Small and Start-Up Firms in the United States: An Update a;219
1.7.3.1;12.1 Introduction;220
1.7.3.1.1;12.1.1 What Is a Statistical Database?;221
1.7.3.2;12.2 Major Statistics on Start-up Financing in the USA;222
1.7.3.2.1;12.2.1 The Kauffman Firm Survey (KFS);222
1.7.3.2.2;12.2.2 Panel Study of Entrepreneurial Dynamics (PSED II);224
1.7.3.2.3;12.2.3 Survey of Business Owners (SBO) 2002;226
1.7.3.3;12.3 Conclusions;228
1.7.3.4;12.4 Major Statistical Databases for Small Firm Financial Research in the USA—A Summary;229
1.7.3.4.1;12.4.1 Survey of Small Business Finances (NSSBF, 1987 and 1993 and SSBF, 1998);229
1.7.3.4.2;12.4.2 Loans to Small Businesses by US Depository Institutions;231
1.7.3.4.2.1;12.4.2.1 June Call Reports on Lending to Small Firms;231
1.7.3.4.2.2;12.4.2.2 The Community Reinvestment Act (CRA) Database;233
1.7.3.4.3;12.4.3 The Survey of Consumer Finances (SCF);235
1.7.3.4.4;12.4.4 Tax Return Data from the Statistics of Income Division of the Internal Revenue Service;237
1.7.3.4.5;12.4.5 NFIB Survey of Credit, Banks, and Small Business;239
1.7.3.5;12.5 Statistics for Time-Series Analysis of Small Business Financing Issues in the USA;240
1.7.3.5.1;12.5.1 Flow of Funds Accounts for Non-farm, Non-corporate Business in the USA;241
1.7.3.5.2;12.5.2 Senior Loan Officer Opinion Survey on Bank Lending Practices;242
1.7.3.5.3;12.5.3 Survey of Terms of Business Lending;242
1.7.3.5.4;12.5.4 Bureau of the Census, Quarterly Financial Reports;243
1.7.3.5.5;12.5.5 NFIB Survey on Small Business Trends;244
1.7.3.5.6;12.5.6 National Venture Capital Association (NVCA)/Thomson Financial Venture Capital Yearbook www.pwcmoneytree.com/moneytre;244
1.7.3.5.7;12.5.7 Center for Venture Research, University of New Hampshire, Angel Capital;245
1.7.3.5.8;12.5.8 Thomson Financial, Initial Public Offerings (IPOs) of Small Issuers;246
1.7.3.6;12.6 Conclusion;246
1.7.3.6.1;12.6.1 Survey of Small Business Finances;247
1.7.3.6.2;12.6.2 Call Reports and CRA Data;247
1.7.3.6.3;12.6.3 Survey of Terms of Business Lending;248
1.7.3.6.4;12.6.4 Survey of Consumer Finances;248
1.7.3.6.5;12.6.5 Finance Company Survey;248
1.7.3.7;References;249
1.8;Author Index;251
1.9;Subject Index;253

Über Autor(innen)

Rassoual Yazdipour is Professor of Finance at California State University-Fresno, Craig School of Business, Department of Finance and Business Law. He is a founding member of the CSU Teaching Business Faculty Council, a system-wide faculty group with much interest in using technology in education. A veteran online educator and researcher, he co-founded and chaired the First Annual CSU Business Conference on Online Teaching and Learning in 2008. He also serves as President and CEO of the Academy of Entrepreneurial Finance, which offers a dedicated forum for exchange of research ideas related to the ever-growing field of entrepreneurial and small business finance, and on the editorial advisory board of the Journal of Entrepreneurial Finance. He has published articles in such journals as Small Business Economics (Springer) and Strategic Change (Wiley) and edited the book, Advances in Small Business Finance (Kluwer, 1991). He holds a Ph.D. from Ohio State University.