A model for the optimal selection of lenders

Inmaculada Rodríguez-Puerta () and Alberto A. Álvarez-López ()
Additional contact information
Inmaculada Rodríguez-Puerta: University of Pablo de Olavide
Alberto A. Álvarez-López: UNED

Annals of Operations Research, 2022, vol. 313, issue 2, No 28, 1269-1284

Abstract: Abstract A private placement is the sale of securities as a way of raising capital. Most private placements are offered to a small number of select investors, at a fixed rate that can be set by the issuer. The solicitation of investors can be simultaneous or sequential, and the chosen style may influence the associated cost. Sequential solicitation is generally more expensive over time since it is carried out gradually, although simultaneous solicitation can be more expensive if it involves a greater number of investors. In this paper, a theoretical model is developed that allows the two styles of solicitation to be compared. It is demonstrated that sequential solicitation generally involves a lower cost than simultaneous solicitation, although it does require a greater number of investors. Conditions are determined under which these two styles of solicitation are equivalent in cost and in the number of investors required. Specifically, it is obtained that, if the group of investors is homogeneous, then both styles of solicitation will have the same monetary cost and will require the same number of investors.

Keywords: Expected utility; Risk aversion; Decision analysis; Risk management; G11; C02; D81 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-021-03988-3 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:313:y:2022:i:2:d:10.1007_s10479-021-03988-3

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-021-03988-3

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().