Congratulations to Professor of Finance Sebastian Gryglewicz and PhD candidate Simon Mayer of Erasmus School of Economics, on the acceptance of their paper 'Optimal Financing with Tokens' by the world-renowned Journal of Financial Economics.
Together with co-author Erwan Morellec (Finance Professor at the Swiss Federal Institute of Technology, Lausanne, Switzerland), Sebastian Gryglewicz and Simon Mayer have developed a model in which a startup firm issues tokens to finance a digital platform, which creates agency conflicts between platform developers and outsiders.
The researchers show that token financing is generally preferred to equity financing, unless the platform expects strong cash flows or faces severe financing needs and large agency conflicts. Tokens are characterised by their utility features, facilitating transactions, and security features, granting cash flow rights.
While security features trigger endogenous network effects and spur platform adoption, they also dilute developers’ equity stake and incentives so that the optimal level of security features decreases with agency conflicts and financing needs.
About the Journal of Financial Economics
The Journal of Financial Economics is a leading peer-reviewed academic journal covering theoretical and empirical topics in financial economics. It is one of the premier finance journals. It provides a specialised forum for the publication of research in the area of financial economics and the theory of the firm, placing primary emphasis on the highest quality analytical, empirical, and clinical contributions in the following major areas: capital markets, financial institutions, corporate finance, corporate governance, and the economics of organisations.
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S. Gryglewicz, E. Morellec and S. Mayer (2020). Optimal Financing with Tokens, Journal of Financial Economics forthcoming
- Professor
- PhD student