Evgeny Lyandres

• Boston University

We compile a comprehensive data set of initial coin offerings (ICOs) from 19 data sources including 11 ICO aggregators. We alleviate severe limitations of available ICO data by performing the first systematic analysis of ICO data quality. We use our data set to study determinants of ICO funding success as well as post-ICO operating performance and...

This paper develops a theory of financing of entrepreneurial ventures via crypto tokens, which is not limited to platform-based ventures. We compare token financing with traditional equity financing, focusing on agency problems and information asymmetry frictions associated with the two financing methods, as well as on risk sharing between entrepre...

This paper shows that the stock market misprices firms’ investment options. We build a real options model of optimal investment under uncertainty to estimate the value of firms’ investment options. We show that firms with valuable investment options have a higher likelihood of being mispriced. Importantly, this mispricing is not one-sided, as such...

This paper develops a theory of financing of entrepreneurial ventures via crypto tokens, which is not limited to platform-based ventures. We compare token financing with traditional equity financing, focusing on agency problems and information asymmetry frictions associated with the two financing methods, as well as on risk sharing between entrepreneur...

Portfolio diversification of firms’ controlling owners influences their firms’ capital investment. Empirically, the effect of owners’ portfolio diversification on their firms’ investment levels is positive for publicly traded firms and tends to be negative for privately held ones. These findings are consistent with predictions of a model in which a...

We study how operating efficiencies in horizontal mergers affect market reactions of merging firms’ rivals, customers, and suppliers. We measure operating efficiency gains using projections disclosed by merging firms’ insiders. Higher efficiency gains are associated with lower announcement returns to merging firms’ rivals (due to increased equilibr...

This paper examines how competition among suppliers affects their willingness to provide trade credit financing. Trade credit extended by a supplier to a cash constrained retailer allows the latter to increase cash purchases from its other suppliers, leading to a free rider problem. A supplier that represents a smaller share of the retailer's purch...

This paper examines how competition among suppliers affects their willingness to provide trade credit financing. Trade credit extended by a supplier to a financially constrained customer allows the latter to increase cash purchases from all of its suppliers, leading to a free-rider problem. This problem becomes particularly detrimental to the trade...

We demonstrate theoretically and empirically that strategic considerations are important in shaping the cash policies of innovative firms. In our model, firms compete in product markets with uncertain structure using cash as a commitment device to invest in innovation. We show that firms’ equilibrium cash holdings are related to the expected intens...

We propose and implement a direct test of the hypothesis of oligopolistic competition in the U.S. underwriting market against the alternative of implicit collusion among underwriters. We construct two models of IPO price setting: a model of oligopolistic competition among underwriters and a model of price coordination among them. The two models lea...

A firm's mix of growth options and assets in place is an important determinant of its optimal default strategy. Our simple model shows that shareholders of a firm with valuable investment opportunities would be able/willing to wait longer before defaulting on their contractual debt obligations than shareholders of an otherwise identical firm withou...

We examine theoretically and empirically potential determinants of investment and operating strategies of public and private firms that are controlled by imperfectly diversified owners. In particular, we demonstrate theoretically and confirm empirically that due to arguably more severe financial constraints that private firms face, the effects on t...

In this paper, we employ a novel, hand-collected dataset of management forecasts of merger-related gains to examine directly for the first time the effects of horizontal merger synergies on product market rivals, as well as on corporate customers and suppliers of the merging firms and of their rivals. The empirical evidence generally supports the p...

We propose and implement, for the first time, a direct test of the hypothesis of implicit collusion in the U.S. underwriting market against the alternative of oligopolistic competition. We construct two models of an underwriting market — a market characterized by oligopolistic competition among IPO underwriters and a market in which banks collude i...

We examine the impact of merger-related operating synergies on firms that have output or input market linkages with companies engaged in horizontal mergers. Using a unique dataset of synergies forecasts by management, we find empirical support for a model that produces unambiguous predictions about the effects of merger synergies on firms directly...

We develop an analytically tractable equilibrium model to examine the link between competition in product markets and stock returns. Firms maximize pro…fits from the sale of their products to consumers. Investors receive …firm profi…ts as investment returns. We characterize fi…rms' ’optimal production plans and expected equity returns, and show tha...

We provide evidence that the positive relation between firm-level stock returns and firm-level return volatility is due to firms' real options. Consistent with real option theory, we find that the positive volatility-return relation is much stronger for firms with more real options and that the sensitivity of firm value to changes in volatility dec...

We examine firms’ strategic incentives to engage in horizontal mergers. In a real options framework, we show that strategic considerations may explain abnormally high takeover activity during periods of positive and negative demand shocks. Importantly, this pattern emerges solely as a result of firms’ strategic interaction in output markets. We sho...

In this paper we examine theoretically and empirically the determinants of cash holdings by innovating firms. Our model highlights an important strategic role that cash plays in affecting the development and implementation of innovation in the presence of competition in the market for R&D-intensive products. Firms' equilibrium cash holdings are sho...

We examine the extent to which the stock market's inefficient responses to resolutions of uncertainty depend on investors’ biased ex ante beliefs regarding the probability distribution of future event outcomes or their ex post irrational reactions to these outcomes. We use a sample of publicly traded European soccer clubs and analyze their returns...

In this paper we provide an investment-based explanation for the popularity of convertible debt. Specifically, we demonstrate the ability of convertible debt to alleviate and potentially totally eliminate the underinvestment problem of Myers (1977). The conversion feature induces shareholders to accelerate investment. This effect arises from the in...

We examine firms' incentives to go public in the presence of product market competition. As a result of their greater ability to diversify idiosyncratic risk in the capital market, public firms' owners tolerate higher profit variability than owners of private firms. Consequently, public firms adopt riskier and more aggressive output market strategi...

This paper aims to assess the strategic e¤ects of mergers and acquisitions on merging …rms' product market rivals, customers, and suppliers. In particular, we provide the …rst analysis of how merger synergies propagate through the supply chain by utilizing a novel dataset of insiders'pro-jections of merger-related operating e¢ ciencies. Based on a...

In this paper we examine a new effect of risky debt on a firm's investment strategy. We call this effect "accelerated investment". It stems from a potential loss of investment option in the event of default. The possibility of default reduces the value of the option to wait and provides equity holders with an incentive to speed up investment. As a...

In this paper, I examine the relation between the direct costs of issuing seasoned equity (SEO gross spreads) and the change in deviation of firms' leverage ratios from their estimated targets following SEOs. If underwriters have bargaining power vis-a-vis issuing firms in setting SEO fees and if the tradeoff theory of capital structure holds, then...

We propose a model that links a firm’s decision to go public with its subsequent takeover strategy. A private bidder does not know its true valuation, which affects its gain from a potential takeover. Consequently, a private bidder pursues suboptimal restructuring policy. An alternative route is to complete an initial public offering first. An IPO...

An investment factor, long in low-investment stocks and short in high-investment stocks, helps explain the new issues puzzle. Adding the investment factor into standard factor regressions reduces the SEO underperformance by about 75%, the IPO underperformance by 80%, the underperformance following convertible debt offerings by 50%, and Daniel and T...

This paper provides evidence that the positive relation between firm-level stock returns and firm-level return volatility is due to real options that firms possess. Consistent with the theoretical prediction that the value of a real option should be increasing in the volatility of the underlying asset, we find that the positive volatility-return re...

This article proposes a new explanation for the large cross-sectional variation in the excess values of diversified firms. The model applies the idea of shareholders' limited liability affecting firms' output market strategies to the analysis of financial and operating choices of conglomerates. The inability of conglomerates to commit to unconstrai...

Why the Structure of Venture Capitalists' Portfolios MattersOptimal Effort LevelsOptimal Portfolio Size and Profit-Sharing RuleEmpirical TestsConclusion NotesAbout the AuthorsAcknowledgment

Past empirical studies find that merger-intensity is related to industry-wide economic, technological, and regulatory shocks. In this paper we analyze how demand shocks affect firms' strategic incentives to merge. Using a real options approach, we show that the effect of mergers on equilibrium industry structure can explain abnormally high takeover...

I develop a simple model that examines the relations between the extent of competitive interaction among firms in output markets, their capital structures, and the aggressiveness of their operating strategies. A firm's optimal leverage is related to the degree to which its operating strategy affects its rivals' value functions and resulting optimal...

In this paper we examine a previously overlooked effect of risky debt on a firm's investment strategy. We depart from the usual agency explanations of the differences between the investment choices of a levered firm and an unlevered one and show in a tax-free setting that in the absence of agency conflicts, the shareholders' of a levered firm exerc...

This paper examines the effects of costly external financing on the optimal timing of a firm's investment. By altering the optimal investment timing, costly financing affects current investment and the sensitivity of investment to internal cash flow. Importantly, the relation between the cost of external funds and investment–cash flow sensitivity i...

Adding a return factor based on capital investment into standard, calendar-time factor regressions makes underperformance following seasoned equity offerings largely insignificant and reduces its magnitude by 37-46%. The reason is that issuers invest more than nonissuers matched on size and book-to-market. Moreover, the low-minus-high investment-to...

In this paper we examine a previously overlooked effect of risky debt on a firm's investment strategy. We depart from the usual agency explanations of the differences between the investment choices of a levered firm and an unlevered one and show that in the absence of agency conflicts, the shareholders' of a levered firm exercise their investment o...