The Most Important Concepts in Finance
Show Less

The Most Important Concepts in Finance

Edited by Benton E. Gup

Anyone trying to understand finance has to contend with the evolving and dynamic nature of the topic. Changes in economic conditions, regulations, technology, competition, globalization, and other factors regularly impact the development of the field, but certain essential concepts remain key to a good understanding. This book provides insights about the most important concepts in finance.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 16: The state of research and the economic environment in small-firm finance

Ramon P. DeGennaro and Michael B. McDonald IV

Extract

McDonald and DeGennaro (2016) and DeGennaro and Dobson (2017) demonstrate, the finance profession has come to very little consensus about small businesses and startup finance in particular. The lack of consensus among financial economists regarding small-firm finance starts with disagreement about definitions. Even fundamental issues, such as the definition of an angel investor, for example, are problematic. Some researchers define angel investors as early-stage investors in a company and the riskiest and earliest equity investors in a company after the entrepreneur himself (Mason and Harrison 2002; Goldfarb et al. 2012). Yet, this is far from the only definition. Other researchers describe angel investors as informal private investors, colorfully described as “friends, family and fools” (Bygrave and Hunt 2007), or wealthy individuals who provide capital for startup companies (Sohl 2003). Still other writers define an angel as a person who provides capital to a private business, owned and operated by someone else who is not a friend or family member (Shane 2009). These differences might seem unimportant from a cursory review, but they have a significant influence on the individuals who are included in the group of angel investors and hence in any study of angel investor practices and investment returns. For instance, the definition of Shane (2009) would have included Warren Buffett’s investment in Goldman Sachs. This is not to say that any particular definition of angel investors is right or wrong, but rather that the lack of consensus makes it difficult to come to any firm conclusions about virtually any area of angel investing.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.


Further information

or login to access all content.