Download or read book Agency Cost of Free Cash Flow Corporate Finance and Takeovers written by Michael C. Jensen and published by . This book was released on 2006 with total page 15 pages. Available in PDF, EPUB and Kindle. Book excerpt: The interests and incentives of managers and shareholders conflict over such issues as the optimal size of the firm and the payment of cash to shareholders. These conflicts are especially severe in firms with large free cash flows--more cash than profitable investment opportunities. The theory developed here explains 1) the benefits of debt in reducing agency costs of free cash flows, 2) how debt can substitute for dividends, 3) why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidation-motivated takeovers, 4) why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil, and 5) why bidders and some targets tend to perform abnormally well prior to takeover.
Download or read book Agency Costs of Free Cash Flow Corporate Finance and Takeovers written by Michael C. Jensen and published by . This book was released on 1986 with total page 7 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book 300 Medium to Hard Sudoku Puzzle Book 2018 written by Laila Webb and published by Createspace Independent Publishing Platform. This book was released on 2018-03 with total page 152 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sudoku craze and pairs the addictive logic-based game with a spectacularly handy format. Filled with 300 grids of varying difficulty, our Sudoku is perfect for strategizing on the bus, train or Plane. Now that's what we call a smart calculation! Medium to Hard Sudoku Puzzle Book
Download or read book Knights Raiders and Targets written by John C. Coffee and published by Oxford University Press. This book was released on 1988 with total page 562 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Corporate Governance and Agency Costs of Free Cash Flow in Acquisitions written by Xilin Zhang and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study directly relates corporate governance to agency costs of free cash flow in acquisitions. We proxy for agency costs of free cash flow by two measures: free cash flows at the fiscal year-end prior to the acquisition announcement and the eventual use of internally generated funds to finance the transaction. We investigate four aspects of corporate governance: institutional investor monitoring, board monitoring, the presence of antitakeover provisions, and executive incentive strength. We find that the quality of corporate governance indirectly affects merger outcomes by mitigating the agency problem associated with the holding, rather than the use, of free cash flows.
Download or read book Applied Corporate Finance written by Aswath Damodaran and published by John Wiley & Sons. This book was released on 2014-10-27 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: Aswath Damodaran, distinguished author, Professor of Finance, and David Margolis, Teaching Fellow at the NYU Stern School of Business, has delivered the newest edition of Applied Corporate Finance. This readable text provides the practical advice students and practitioners need rather than a sole concentration on debate theory, assumptions, or models. Like no other text of its kind, Applied Corporate Finance, 4th Edition applies corporate finance to real companies. It now contains six real-world core companies to study and follow. Business decisions are classified for students into three groups: investment, financing, and dividend decisions.
Download or read book The Free Cash Flow Approach written by Ralph Johann and published by GRIN Verlag. This book was released on 2008-09 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2005 in the subject Business economics - General, grade: 1.3, California State University, Fullerton, course: Theory of Corporate Finance, 21 entries in the bibliography, language: English, abstract: This paper will deal with the procedure and implementations of firm/stock valuation using FCF approach and WACC - the weighted average cost of capital. On the road, the different approaches and methods of firm valuation, the various inputs of WACC and the final procedure finding the fair market value of the firm using Pro Forma Financial Statements, will be discussed. In this valuation method the two main parts contributing to the final value of the firm are Free Cash Flows (FCF) and the weighted average cost of capital. It is then used the time value of money concept along with some educated guesses about the long term sales growth rate and the long term WACC to apply common capital budgeting rules of project evaluation. Besides that, the paper will shortly discuss the influence of capital structure on a firm's value. It will come out that there is a difference in value whether the company is leveraged and uses debt or not. When it comes to the different inputs of the WACC, a main focus will be on the required rate of return for shareholders. Finding the 'right' beta and an appropriate estimate for the market risk premium are the main issues of that part. Therefore, the CAPM model and its specific determinants will be analyzed. Thereafter, the nature of pro forma financial statements and the different parts of them will be defined. It will be described how the 'free cash flows' are determined and how that leads to the actual valuation procedure. Finally, the paper will focus on the terminal value as probably the most important and affecting part of the calculated firm value and its nature as a perpetuity in an investing perspective. The conclusion will finally deal with a critical assessment of the firm valuation process with the FCF method.
Download or read book The Theory of Corporate Finance written by Jean Tirole and published by Princeton University Press. This book was released on 2010-08-26 with total page 657 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Magnificent."—The Economist From the Nobel Prize–winning economist, a groundbreaking and comprehensive account of corporate finance Recent decades have seen great theoretical and empirical advances in the field of corporate finance. Whereas once the subject addressed mainly the financing of corporations—equity, debt, and valuation—today it also embraces crucial issues of governance, liquidity, risk management, relationships between banks and corporations, and the macroeconomic impact of corporations. However, this progress has left in its wake a jumbled array of concepts and models that students are often hard put to make sense of. Here, one of the world's leading economists offers a lucid, unified, and comprehensive introduction to modern corporate finance theory. Jean Tirole builds his landmark book around a single model, using an incentive or contract theory approach. Filling a major gap in the field, The Theory of Corporate Finance is an indispensable resource for graduate and advanced undergraduate students as well as researchers of corporate finance, industrial organization, political economy, development, and macroeconomics. Tirole conveys the organizing principles that structure the analysis of today's key management and public policy issues, such as the reform of corporate governance and auditing; the role of private equity, financial markets, and takeovers; the efficient determination of leverage, dividends, liquidity, and risk management; and the design of managerial incentive packages. He weaves empirical studies into the book's theoretical analysis. And he places the corporation in its broader environment, both microeconomic and macroeconomic, and examines the two-way interaction between the corporate environment and institutions. Setting a new milestone in the field, The Theory of Corporate Finance will be the authoritative text for years to come.
Download or read book The Analysis and Use of Financial Statements written by Gerald I. White and published by John Wiley & Sons. This book was released on 2002-12-30 with total page 786 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting Standards (US and International) have been updated to reflect the latest pronouncements. * An increased international focus with more coverage of IASC and non-US GAAPs and more non-US examples.
Download or read book The Transaction Cost Economics Project written by Oliver E. Williamson and published by Edward Elgar Publishing. This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Transaction cost economics has and continues to be a fruitful area of research. There is still much to be done in the field with past research being used in conjunction with the vast number of contractual phenomena that have yet to be investigated in transaction cost economics terms. New challenges are posed by the need to move beyond the design of new contractual instruments (such as financial derivatives) to include an examination of the lurking hazards that attend contract implementation.
Download or read book Agency Costs of Free Cash Flow and the Market for Corporate Control written by Suzanne Ching-Fang Lin and published by . This book was released on 2006 with total page 221 pages. Available in PDF, EPUB and Kindle. Book excerpt: [Truncated abstract] This thesis investigates the relevance of Jensen’s (1986) free cash flow theory to the market for corporate control in Australia. Jensen posits that firms generating cash in excess of that required to fund positive NPV projects face greater agency problems as the free cash flow exacerbates the conflict of interest between shareholders and managers. One implication from Jensen’s free cash flow theory is that firms with high levels of free cash flow are more likely to initiate takeovers that are value-decreasing. There are two practical issues in testing Jensen’s theory; first, constructing an appropriate proxy for free cash flow and secondly, identifying firms with free cash flow. These issues are addressed directly in the first of the two essays that comprise this thesis. The first essay develops and assesses the merits of four operational measures for free cash. One of them is a stock measure while the others are flow measures. The stock measure is included because previous studies have mostly used the stock measure of cash when identifying firms rich in free cash (henceforth, cash rich firms), despite that Jensen (1986) has made explicit reference to free cash flow. We test the validity of this approach by investigating whether stock measures of free cash coincide with flow measures. Our results reveal that the stock and flow measures of free cash give rise to quite different lists of cash rich firms. This is an important empirical contribution of the thesis. Given the lack of definitive criteria for deciding which operational measure of free cash flow is most appropriate, we identify multiple sets of free cash flow firms based on the different operational measures developed. For each operational definition, two methods are used to identify cash rich firms. The first method defines a firm as cash rich if its cash variable ranks in the tenth percentile. The second method defines firms as cash rich if their cash variable value is greater than one and a half standard deviations of the value predicted by a model.
Download or read book Handbook of the Economics of Finance written by G. Constantinides and published by Elsevier. This book was released on 2003-11-04 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.
Download or read book Agency Costs of Free Cash Flow written by Indraneel Chakraborty and published by . This book was released on 2016 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Free Cash Flow (FCF) agency conflicts exist when managers divert cash flow for private benefits. We identify the impact of unobservable FCF conflicts on firm policy using a structural approach. Measurement equations are constructed based on observable managerial choices: payout policy changes and personal portfolio decisions around exogenous tax rate changes. We find that FCF agency conflicts cause (i) under-leverage, leading to higher corporate taxes and (ii) under-investment in PP&E, leading to slower firm growth. Capital markets recognize FCF conflicts and discount such firms. Finally, firms with (i) large institutional holdings or (ii) better-aligned executive compensation, suffer less from FCF agency conflicts.
Download or read book Corporate Governance Regimes written by Joseph McCahery and published by Oxford University Press, USA. This book was released on 2002 with total page 728 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume provides an up-to-the-minute survey of the field of corporate governance, focusing particularly on issues of convergence and diversity. A number of topics are discussed including bankruptcy procedures, initial public offerings, the role of large stakes, comparative corporate governance, and institutional investors.
Download or read book Behavioral Corporate Finance written by Hersh Shefrin and published by College Ie Overruns. This book was released on 2017-04-16 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Control of Corporate Europe written by Fabrizio Barca and published by OUP Oxford. This book was released on 2001-11-15 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: Written by an international team of authors, this book provides the first systematic account of the control of corporate Europe based on voting block data disclosed in accordance with the European Union's Large Holdings Directive (88/627/EEC). The study provides detailed information on the voting control of companies listed on the official markets in Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, the United Kingdom, and, as a benchmark comparison, the United States. The authors record a high concentration of control of corporations in many European countries with single blockholders frequently controlling more than fifty per cent of corporate votes. In contrast, a majority of UK listed companies have no blockholder owning more than ten per cent of shares, and a majority of US listed companies have no blockholder with more than six per cent of shares. Those chapters devoted to individual countries illustrate how blockholders can use legal devices to leverage their voting power over their cash-flow rights, or how incumbents prevent outsiders from gaining voting control. It is shown that the cultural and linguistic diversity of Europe is (almost) matched by its variety of corporate control arrangements.
