Cálculo del flujo de calor a través de tuberías en base a datos de la Norma

In this study, I point to a generic approach to assess financial intermediaries, i.e., the financing cost from the fund demand-side. The empirical result shows that using financing cost as a fair standard to judge the efficiency of a financing activity is not only mathematically possible but also economically meaningful. For a number of reasons, I expect the cost-economy standard can be generalised and further developed to a wider range of financing intermediaries.

First, as discussed in section 2.4.2.1, because of the complexity of the PE business model, the intermediary equilibrium approach is the most adaptable approach compared with the asset class and principal approaches. The financial intermediary approach looks at a bigger picture of the wide economy where all participants work towards the end of social well-being, such as entrepreneurship, productivity, information transparency, employment and innovation. It does not serve the one-party interests such as limited partners, PE fund unitholders or PE professionals. As a result, the intermediary equilibrium approach serves as a fair standard to judge the appearance and legitimacy of any financing process over time. Second, the emergence of any financing intermediary is associated with specialisation of the financial markets (Rajan and Zingales, 2003). In the process of specialisation, the costs in the transaction of services and products between specialities arise. A cost-economy rule can be easily applied to judge the new financing intermediaries such as crowdfunding, peer-to-peer financing and other forthcoming financial intermediaries. Third, transaction cost is viewed as having great value and deserves further development in the ever-evolving financing activities (Collins and Fabozzi, 1991; Lesmond et al., 1999). The literature provides a parameter framework to measure the cost, such as search cost μ or fee level of d, induced by financing

162

through intermediaries (Chan, 1983). In this study, I conduct a number of trials to judge distribution, information and governance efficiency in all stages of PE-backed financing. It would be worth further investigating the wider area of economic efficiency proposed by classical theories such as allocation efficiency (Markovits, 1975), productive efficiency (Samuelson, 1962) or Pareto efficiency (Pareto, 1902; 1916).

6.3.2 Research objective two

The substitution hypothesis of financing cost in my study consists of both explicit and implicit costs. I provide measures of explicit financing cost from the demand-side of PE- backed firms to enhance my understanding of the economic role of PE. I also introduce the implicit costs paid to consultants, lawyers and accountants, often excluded from existing studies that can be significant for PE-backed firms in the real business world. I acknowledge that this explicit and implicit motivation raises two distinct measures of cost that do not consistently correspond to tested institutional factors. Furthermore, unlike the explicit cost, which is a number, the implicit cost takes the form of advisory fees. This variable design precludes us from aggregating the overall financing cost of PE-backed firms. There is a concern that when one institutional factor is significantly correlated with both cost measures with opposite signs, I could not make a conclusive judgement of my hypothesis. However, my overall results, with one exception, are unambiguous. In my LBO sample, creditor rights are negatively related to offering yield but, at the same time, positively related to advisory fees. Both cases are consistently significant. Apart from this, all other study hypotheses are confirmed.

163 6.3.3 Research objective three

The third research objective examines a comprehensive spectrum of the institutional environment that presumably shapes the PE business practice and economic outcomes. My examined institutional features are significant regarding their diverse geographic span. Using country borders as the determinant of the institutional environment, my sample covers distinct regions of the world, Asia Pacific, the US, and the EU. However, emerging markets such as China, Brazil, and Russia, are rarely covered in existing studies. My examined institutional features are specific in their socially optimal value. I examined three distinct preferences of debt enforcement procedures before judging the impact of creditor rights on restructuring LBO business deals. For shareholder rights, I decomposed the bundle of rights into sticks and analysed the effect of each stick separately. The analysis of law enforcement also raises an important view that the legitimacy of rights and successful claims over the same rights are two different things. Even if the legal rights are delineated, the claim for and enforcement of the rights could raise costs.

6.3.4 Research objective four

Research objective four generates a series of critical informal institutional features that determine the overall financing cost. I provide novel evidence of a normative, cognitive institution that presumably shapes the PE professionals’ business practice. Based on a norm of PE-expected professional settings, I find that financing through intermediaries is not cost effective in all the areas, such as information gathering or search efforts, as proclaimed in existing studies (Fama, 1985; Mayer, 1988; Myers and Majluf, 1984). Specifically, my test of the hypothesis (H4a) shows that PEs’ search efforts facilitate high-risk businesses (start-ups, SMEs, distressed business) to gain access to a broader scope of social capital. However, I cannot generalise this efficiency to other areas such as information gathering. The rejection of

164

hypothesis (H4b) suggests VCs are less motivated to improve the information asymmetry since they are brokers of information and can extract rent for intermediary services (Blyler and Coff, 2003; Toms et al., 2015). As a financial intermediary becomes more complicated, there will be new norms established that will exhibit appropriateness. I propose that a norm is a proven efficiency as far as it serves the cost-economy approach. In my examination of the cognitive institution of social network and years of business, I find reputational bonding and knowledge advantage explains the higher explicit financing cost. Such diseconomies could not be easily mitigated because the social network is based more on personal relationships than formal authority (Burt, 2009). The cognitive institution differs from a normative institution in that the former is an objective working at all societal levels and dominates all economic departments including financial markets.