2. INTRODUCCIÓN
2.2 EL ALCOHOL
2.6.1 Conceptualización, modelos teóricos y
This study has several limitations. First, my study includes institutional indexes with different time regimes. The creditor rights index was developed in 2006, and the shareholder rights index is based on a 2013 survey. The law enforcement index is from the study by La Porta et al. (2006). I do not consider the amendment of La Porta et al.’s (1997) work by Spamann (2010) because the revision is restricted to the anti-director index part and not that of law enforcement. The index instrument variables are from Schwab and Sala-i-Martin (2010; 2015) and Hofstede (2015). Given that my PE financing samples cover over 40 years, there is a concern that my data are subject to the limitation of a time-regime mismatch. However, the time regime bias should not be a critical concern in my study. Culture values are extremely stable over time; it takes decades for cultures to shift. Even so, the rankings among cultures remain intact (Hofstede et al., 2011).
Secondly, in our LBO sample, I do not differentiate between the straight bond and those embedded with options whose financing cost may be better assessed using option adjusted spread (OAS) and not offering yield. Since my study has a distinct focus on the financing cost, in my study of LBO financing, the offering yield at issuance in the primary market, I do not consider the ex-post performance of bonds in the secondary market where OAS is widely
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used to judge the fair-pricing of the option-embedded bond. Admittedly, there can be a difference between the spread (comparable z-spread of an option-free bond) and OAS. However, such a difference, as widely acknowledged in all financing tools, is the main source of gain or loss that investors’ speculate. Considering that such differences determine the attractiveness of the bond, the OAS is not as important to bond issuers as it is to bond investors who are, however, not the target of my study. Nevertheless, I acknowledge that pooling straight bonds and option-embedded bonds distorts my main results. Unfortunately, data that would enhance the study’s analysis are not available.
Thirdly, the specification of my statistical regression can be substantially improved through better choice of an instrument variable. One alternative is culture dimension measures from Tang and Koveos (2008). In Tang and Koveo’s (2008) work on cultural dimension, the sample countries cover a larger scope including developing countries that Hofstede (2015) did not consider. As a robustness test, I use long-term orientation versus short-term normative orientation (LTO_TK) and power distance index (PDI_TK) and reran Model 3.3b. My main findings remain unchanged after replacing the instrument variables. However, the Models do not satisfy all specification criteria and hence are not reported here.
Fourth, a number of my VC and LBO deals are cross-border transactions. Admittedly, when looking into international transactions, one should consider institutional factors from both the buy- and sell-side. The comparison of these factors, especially the legal variables, helps to explain a variety of deal dimensions such as deal volume and pricing (Cal et al., 2015; Wang and Wang, 2012). More importantly, the informal institution has been recorded as shifting over time with income level as people share knowledge within a society (Tang and Koveos, 2008). In the same spirit, in the PE industry, professional practice has been known to be
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exported, first from the US, and further shaped by the local regulatory and cognitive institution (Manigart et al., 2002; Wright et al., 2005). An examination of how PEs react to changes and differences of institutions will greatly complement the understanding of my results and should be put on an agenda for further research.
Fifth, since the detection of norms relies on the observation of proxies such as age, social ties and analyst coverage of every single PE financing deal, the quality of manually made variables can be controlled only at the data-collection stage. Although my findings are generally consistent with previous studies, measurements such as institutional variables, especially the informal ones, can be challenged for their precision.
Though my study has its distinct focus, there is a need for further study on other determinants that may also impact PE financing efficiency. For example, previous studies show that institutional environment factors are helpful and worth further development. I recommend that a further index be developed and tested for this line of research. Such an index may include investor protection rights, financial market depth, and other matters. It would be beneficial to test shareholder rights using the LBO sample as the debt instrument applied in LBO fund-raising is mostly equity-like. Given that a proportion of debt securities in LBO financing is embedded with options, it would also be rewarding to use OAS from a larger, comprehensive dataset to explore further empirical examination of over- or under- pricing of option-embedded debt security. Another avenue for further study lies in the more precise measurement of financing cost. It would be interesting to know how much, in nominal dollars, the exact intermediary fee is in a financing deal if reliable data are available.
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