5.1 Why is it important to be organised?

  • 87% of items that are filed into a filing cabinet are never looked at again. STANFORD UNIVERSITY

  • TIn 2010, the world’s digital information output was estimated to pass 1.2 zettabytes. A zettabyte is a new term which equals a thousand billion gigabytes.UNIVERSITY OF CALIFORNIA (BERKELEY)

  • A new blog is created every second. TECHNORATI

  • 10% of salary costs are wasted as employee
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1.7 Monitoring equity performance

For those equities in issue their current market value and some indicators of their performance are provided in the daily press. Table 3 shows the closing levels and the volume of shares traded in respect of a selection of companies on the London, New York, Frankfurt and Tokyo Stock Exchanges on 7 June 2005.

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1.2 Staying private – private equity and venture capital

For many companies – particularly in Europe and Asia – private equity together with retained earnings have been a sufficient source of capitalisation, allowing these companies to avoid listing on a stock exchange. (Retained earnings are the post-tax undistributed – i.e. not paid out in dividends – profits of a company.) The capacity to remain private has been assisted by the rapid growth of private equity in recent years. Private equity has been employed not just by newly established
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1.1 Equity instruments

Both public and private incorporated companies can issue shares in order to finance their operations. Those who invest in shares expect a return blended from dividend yield and capital growth – although the expectations of investors vary from country to country. In the USA, for example, many companies rarely, if ever, pay dividends, with the result that investors seek their returns through share price growth. You will have learnt from earlier finance studies that investors require higher re
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Learning outcomes

After studying this unit you should be able to:

  • understand private equity and the role of venture capital companies in providing this;

  • understand why and how public equity issues can be undertaken;

  • look at the reasons for cross-listing on stock exchanges;

  • examine why a company might de-list from an exchange and return to private ownership.


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Introduction

This unit looks at equity finance – the range of equity instruments and markets available to a company. First, we look at private equity and the role of venture capital companies that provide such finance. We look at the mechanics of an initial public offering (IPO) and at recent cases of companies ‘listing’ on a stock exchange for the first time. We go on to explore certain important strategic issues for a business when considering equity finance:

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Acknowledgements

The content acknowledged below is Proprietary (see terms and conditions) and is used under licence.

Unit Image

Zohar_Manor-Abel

All other materials included in this unit are derived from content originated at the Open University.

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References

Baker, M. (2006). Private communication, Business in the Community, 29 March.
Brewster, D. (2004). ‘CalPERS wave-making brings flak’, Financial Times Fund Management, 9 August.
Business Week (2004). ‘Special report: corporate governance, investors fight back’, 17 May.
Butz, C. (2003). Decomposing SRI
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1.3 Learning through activities

The unit has been designed to actively involve you in your own learning. One of the most important aspects of this are the activities that you are asked to do.

For each activity, there is a suggested time, for example, ‘Allow about 10 minutes for this activity’. These estimates are intended to give you a sense of the amount of effort required. However, you may find that you spend longer on each activity. That is fine, so long as you feel you are learning. If you come across ideas th
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3.1 The beginning of the research process

What distinguishes psychological research from common sense is that psychologists approach information and knowledge in a systematic and consciously articulated way. They use rules and procedures about how to build and apply theories, how to design studies to test hypotheses, how to collect data and use them as evidence, and how to evaluate all forms of knowledge. (See Figure 1, ‘The cycle of enquiry’ in Author(s): The Open University

3.3 Operations in modular arithmetic

The Division Algorithm tells us that all the possible remainders on division by an integer n lie in the set

We denote this set by Author(s): The Open University

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3.2 Congruence

The Division Algorithm tells us that, when we divide any integer by a positive integer n, the set of possible remainders is {0, 1, 2, …, n − 1}. Integers which differ by a multiple of n have the same remainder on division by n and are, in this sense, ‘the same’ as each other. We now
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