Co-Financing Hollywood Film Productions with Outside Investors

Co-Financing Hollywood Film Productions with Outside Investors

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Over the past two decades, investors from outside the motion picture industry have increasingly supplied equity to U.S. film productions. Today, these so-called co-financing arrangements are a common phenomenon in Hollywood. While the large studios usually carry out the operative tasks of movie production and distribution, the financiers as co-owners of the completed films have rights to the residual profits. Kay H. Hofmann analyzes the conflicts of interest and the organizational problems that may arise between the experienced major studios and investors with comparably low industry expertise. Guided by principal agent theory, the empirical analysis provides evidence for adverse selection and multiple aspects of moral hazard during production as well as distribution. Based on these findings, the author develops solutions that are not only relevant for current and future investors but also for studios and film producers who rely on the long-term availability of external funds.Elberse aamp; Anand (2007) circumvent this problem by using the simulated Hollywood Stock Exchange (HSX) market. ... The summer months and the roughly six weeks between Thanksgiving and New Yeara#39;s Eve are considered the times with highest demand and ... And this strategy appears to pay off because on average the important U.S. national holiday weekends, with many of them falling in the highanbsp;...

Title:Co-Financing Hollywood Film Productions with Outside Investors
Author: Kay H. Hofmann
Publisher:Springer Science & Business Media - 2012-10-28

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