Factors affecting the selling prices of small firms
Name
400009463-MIT.pdf
Description
Full printable version
Size
2.04 MB
Format
Adobe PDF
Checksum (MD5)
ec379540d9c22bfb78e29408ae8ef337
Author(s)
Somervuo, Timo J. (Timo Juhani)
Advisor(s)
Antoinette Schoar.
Date Issued
2008
Publisher
Massachusetts Institute of Technology
Abstract
58 percent of the jobs in the United Stated are created by firms with fewer than 500 employees (Davis, et al. [1998]). Yet, there is only limited research done on the industry trends and conditions affecting small company sale transactions. The small business industry has very different dynamics compared to the large public companies. Based on my findings, small businesses have significantly lower price-to-earning ratios compared to large companies. In this paper, I study the economic conditions affecting small firms and variables that affect the selling prices of these companies. I show that there exists a strong informational asymmetry between the buyers and sellers of small companies that lower the transaction prices. I also show that market illiquidity and contingent contracts can impact the selling prices of small companies.
Description
Thesis (M. Eng.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science, 2008.
Includes bibliographical references (p. 36-37).
Subjects
Electrical Engineering and Computer Science.
MIT Department
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
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