Innovations In Dequity Financing

Features

Description

During the 1980s, and particularly since the market crash of 1987, corporations and entrepreneurs have been seeking new ways to finance the establishment and growth of new businesses. One of the outcomes of these efforts has been the hybrid security, generically called dequity because it is neither a bond nor a stock.

In this work, Andrew Chen and John Kensinger examine the various forms of dequity, describing its characteristics, how it evolved, how it's being used, and what the future may hold for it. In looking at the many financial innovations that blended the traits of debt and equity, Chen and Kensinger find three revolutionary changes that took place in the '80s: the use of debt to increase equity ownership by employees; the transfer of control over corporate resources from managers to lenders; and the shift from owning assets indirectly through corporate stock toward direct ownership of production assets by investors.

They fully explore the increased specialization of roles that has resulted in employee control of companies, as well as detailing such practical issues as the tax advantage of leveraged ESOP, the value of organizational capital, innovative methods for reducing the cost of going public, and the benefits of RD limited partnerships.

This is the first book to fully analyze the development of dequity, and will be an important reference source for a variety of individuals, including investment bankers, corporate financial executives, institutional investors, and students of finance and banking. Review: ?This outstanding book shows how the new financial innovations of dequity have transformed the traditional business world and led to new forms of business organization.

The 1980s witnessed an increased equity owned by employees. It also saw a change in control from managers to institutional lenders. Lastly, it saw a change from indirect ownership of corporate assets to the direct ownership of the production assets. In short, companies are now owned and controlled by the very people who perform the tasks.

Moreover, the tools they use to perform the tasks are now owned by institutional investors such as pension funds, insurance companies, and endowment funds. Dequity accomplished this transformation. After explaining the attractiveness of dequity, Chen shows the characteristics and uses of its different forms.

The book draws upon material published over the last five years as well as new previously unpublished material. Recommended for upper-division undergraduate and graduate audiences.?-Choice