Download or read book Essays on Capital Structure Decisions written by Philipp Immenkötter and published by . This book was released on 2014 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Corporate Capital Structure Decisions written by Timo Löyttyniemi and published by . This book was released on 1991 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Capital Structure and Firm Investment written by Yiming Xu and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I study the interactions between firms' capital structure and real decisions. First, I investigate how a firm's financial leverage will impact its investment contingent on whether future growth opportunities are anticipated. Second, I test the under and over investment hypothesis related to debt financing contingent on whether the firm is likely to under or over invest. Last, I investigate how a firm's production technology can impact its production and capital structure decisions. In Chapter 1, I investigate the impact of anticipations of future growth opportunities on leverage-investment interactions. I show that when growth opportunities are unanticipated, the negative impact of leverage on investment is up to two times larger than when they are anticipated. The presence of institutional stockholdings significantly reduces the under investment problem. An instrumental variable analysis reveals that the leverage-investment relationship is weak when the problem of endogeneity is controlled. The results provide strong evidence that Canadian firms take ex ante leverage adjustments to mitigate the debt overhang problem. Chapter 2 studies the extent to which leverage-investment interactions depend on the level of initial investment as well future investment opportunities in US firms. I find a strong negative relationship between leverage and investment for firms with low levels of (initial) investment and high investment opportunities. I also find a positive relationship between leverage and investment for firms with high levels of (initial) investment and low growth opportunities. I distinguish between Tobin's Average Q and Marginal Q as proxies for firms' investment opportunities and propose a novel method to estimate Marginal Q. Chapter 3 is a joint work with Varouj Aivazian. In this chapter, we investigate the interactions between the flexibility of a firm's production and its financial structure. This chapter shows that production flexibility is an important factor explaining the cross sectional variations in financial leverage among U.S. firms. Alternative empirical measures of production flexibility are all shown to be positively associated with financial leverage. This chapter also develops a novel measure of inter-temporal production flexibility and identifies important linkages between production and financing decisions.

Download or read book The Capital Structure Decision written by Harold Bierman Jr. and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1958 an academic paper on corporate finance written by two professors (Merton Miller and Frances Modigliani, who were later awarded the Nobel prize for their research efforts) was published in The American Economic Review. One prime conclusion of their paper was that the exact form of a firm's capital structure did not affect the firm's value. Later papers by the same two authors and by many others modified the assumptions and changed this conclusion. We now think that capital structure decisions do affect a firm's value and corporate managers should understand better the financing alternatives that are available. One of the most important financial decisions is the decision to buy or lease assets. The leasing industry is large and getting larger. Unfortunately, it is very easy for a firm to evaluate incorrectly lease alternatives (see Chapter 12). The capital structure decision is one of the three most important financial decisions that management make (the distribution of earnings and the capital budgeting decisions are the other two contenders). Managers should increase their understanding of capital structure alternatives and remember that choosing the best capital structure is an art and not an exact simple calculation. But applying the art can be improved with understanding.

Download or read book Capital Structure Decisions written by Yamini Agarwal and published by John Wiley & Sons. This book was released on 2013-03-29 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inside the risk management and corporate governance issues behind capital structure decisions Practical ways of determining capital structures have always been mysterious and riddled with risks and uncertainties. Dynamic paradigm shifts and the multi-dimensional operations of firms further complicate the situation. Financial leaders are under constant pressure to outdo their competitors, but how to do so is not always clear. Capital Structure Decisions offers an introduction to corporate finance, and provides valuable insights into the decision-making processes that face the CEOs and CFOs of organizations in dynamic multi-objective environments. Exploring the various models and techniques used to understand the capital structure of an organization, as well as the products and means available for financing these structures, the book covers how to develop a goal programming model to enable organization leaders to make better capital structure decisions. Incorporating international case studies to explain various financial models and to illustrate ways that capital structure choices determine their success, Capital Structure Decisions looks at existing models and the development of a new goal-programming model for capital structures that is capable of handling multiple objectives, with an emphasis throughout on mitigating risk. Helps financial leaders understand corporate finance and the decision-making processes involved in understanding and developing capital structure Includes case studies from around the world that explain key financial models Emphasizes ways to minimize risk when it comes to working with capital structures There are a number of criteria that financial leaders need to consider before making any major capital investment decision. Capital Structure Decisions analyzes the various risk management and corporate governance issues to be considered by any diligent CEO/CFO before approving a project.

Download or read book Capital Structure and Corporate Financing Decisions written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2011-03-31 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environment Given the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth. Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firms This valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.

Download or read book Two Essays in Applied Economics and Finance written by Bennett W. Golub and published by . This book was released on 1984 with total page 568 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Capital Structure and Trade Financing written by Klaus Hammes and published by Department of Economics School of Economics and Commercial Law Go. This book was released on 2003 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Financing Decisions written by Alan Sidney Kaplan and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Capital Structure written by Özde Öztekin and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: My dissertation examines international differences in the determinants of capital structure and firms' adjustment to optimal capital structure across 37 countries over the period from 1991 to 2006. I first explore which leverage factors are consistently important for the capital structure decisions of firms around the world. The results highlight past leverage as the most important factor in all sample countries. Next, I examine the adjustment to optimal leverage. A firm's ability to adjust its leverage is greatly influenced by economic, legal, and political institutions, corporate governance, tax systems, and the structure of credit and securities markets of the countries. In institutional environments with higher adjustment costs, due to the severity of external financing costs and regulatory cash constraints, the adjustment is significantly slower; in settings with greater adjustment benefits as implied by higher tax shields and the ability to prevent distress and deviation costs, the adjustment is considerably faster. Collectively, my research indicates that a country's legal and institutional heritage is a significant factor in determining a firm's choice of capital structure and the adjustment process to optimal leverage around the world.

Download or read book Essays on Financing Decisions Redemption Features and the Joint Capital Structure debt Maturity Decision written by and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on Corporate Capital Structure written by Boris Albul and published by . This book was released on 2012 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies capital structure decisions of levered and unlevered firms using the modeling framework of Leland (1994). The first chapter, Cash Holdings and Financial Constraints, focuses on optimal management of cash holdings by equity holders of a levered, financially constrained firm. I add financial constraints as a market friction to the traditional model. A financially constrained firm is not able to issue new equity to subsidize net operating losses and is subject to premature, costly default on its straight debt. The more constrained the firm is the less equity it is able to issue and the more likely it is to default. Equity holders mitigate the effects of financial constraints by managing a costly cash account, based on retained net operating profits. In the theoretical section, I show that firms that are more financially constrained optimally hold more cash but remain more likely to default compared to their less constrained counterparts. Hence, firms with higher cash holdings are riskier, and claims on their assets should trade at a premium. In the empirical section, I find evidence of this observation in straight debt and common equity markets. Firms with higher cash holdings are observed with higher yields on debt and higher returns on equity, In the second chapter, Contingent Capital Bonds (CCBs) and Capital Structure Decisions, a joint work with Dwight Jaffee and Alexei Tchistyi, we provide a formal model of CCBs, a new instrument offering potential value as a component of corporate capital structures for all types of firms, as well as being considered for the reform of prudential bank regulation following the financial crisis of 2007-2008. CCBs are debt instruments that automatically convert to equity if and when the issuing firm reaches a specified level of financial distress. We develop closed form solutions for CCB value under three assumptions. First, the firm is allowed a tax deduction on its CCB interest payments as long as the security remains outstanding as a bond. Second, we assume that adding CCBs to a firm's capital structure has no impact on the level of the firm's asset holdings. Third, we require that the CCB conversion to equity occurs at a time prior to any possible default by the firm on its straight debt. The key contribution of our work is that we provide a formal financial model in which the effects of alternative CCB contract provisions can be analytically evaluated. We show that a firm will always gain from including CCB in its capital structure as a result of the tax shield benefit. A firm creating a de novo capital structure, assuming it faces the regulatory constraint that the CCB can only replace a part of what would have been the optimal amount of straight debt, will always issue at least a small amount of CCB. The reduction in expected bankruptcy costs ensures a net gain, even if the tax shield benefits are reduced. We show that a firm will never add CCB to an existing capital structure, assuming that it faces the regulatory constraint that the CCB can only be introduced as part of a swap for a part of the outstanding straight debt. While the swap may increase the firm's value - the value of reduced bankruptcy costs may exceed any loss of tax shield benefits - the gain accrues only to the holders of the existing straight debt. As in a classic debt overhang problem, equity holders will not act to enhance the overall firm value. We show that for a Too-Big-To-Fail firm, for which the straight debt is risk free because the bond holders correctly assume they will protected from any potential insolvency, under a regulatory limitation on the amount of debt such a firm may issue, a CCB for straight debt swap reduces the value of the government subsidy by reducing the expected cost of bondholder bailouts. While this has a taxpayer benefit, the equity holders of such a firm would not voluntarily participate in such a swap. We demonstrate that CCBs create an incentive for market manipulation. CCB holders may have an incentive to manipulate the stock price to a lower value if the amount of equity they receive at conversion is sufficiently high. Equity holders may have an incentive to manipulate the stock price down if the amount of equity they give up at conversion is sufficiently low. We summarize, that the regulatory benefits of CCB issuance with respect to bank safety will generally depend on the CCB contract and issuance terms. Perhaps most importantly, the regulatory benefits vanish if banks simply substitute CCBs for capital, leaving the amount of straight debt unchanged. It is thus essential to require CCB issuance to substitute for straight debt (and not for equity).

Download or read book The Capital Structure Decision written by Harold Bierman Jr and published by . This book was released on 2002-11-30 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1958 an academic paper on corporate finance written by two professors (Merton Miller and Frances Modigliani, who were later awarded the Nobel prize for their research efforts) was published in The American Economic Review. One prime conclusion of their paper was that the exact form of a firm's capital structure did not affect the firm's value. Later papers by the same two authors and by many others modified the assumptions and changed this conclusion. We now think that capital structure decisions do affect a firm's value and corporate managers should understand better the financing alternatives that are available. One of the most important financial decisions is the decision to buy or lease assets. The leasing industry is large and getting larger. Unfortunately, it is very easy for a firm to evaluate incorrectly lease alternatives (see Chapter 12). The capital structure decision is one of the three most important financial decisions that management make (the distribution of earnings and the capital budgeting decisions are the other two contenders). Managers should increase their understanding of capital structure alternatives and remember that choosing the best capital structure is an art and not an exact simple calculation. But applying the art can be improved with understanding.

Download or read book Three Essays in Financial Economics written by Harry Charles DeAngelo and published by . This book was released on 1977 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Critique on Optimal Capital Structure written by Dr. Syed Shabib ul Hasan and published by . This book was released on 2013 with total page 2 pages. Available in PDF, EPUB and Kindle. Book excerpt: The existence of an optimal capital structure for a firm has always remained a matter of serious discussion among financial analysts and academia. The conventional approach advocates the existence of optimal capital structure based on the relationship between the cost of capital and the capital structure of the firm. According to this approach the weighted average cost of capital falls initially with leverage as the increase in required return on equity does not completely offset the cheaper debt financing. However, later on when the increase in required return on equity is more than what it offset in the use of cheaper debt financing in the capital structure, the weighted average cost of capital starts to ascend which further increases once the cost of debt financing starts to go up as well. The conventional approach therefore holds that there is the possibility of the existence of “optimal capital structure” based on the relationship between cost of capital and the capital structure of the firm. However Modigliani & Miller in their significant and influential work on the effects of capital structure on the firm's value, conclude that where there is a perfect financial market “capital structure is irrelevant” considering no-tax case, which can be literally understood as the firm's value, being independent of its financial structure having no optimal capital structure. This paper aspires to evaluate the Modigliani and Miller corporate capital structure model and critically examine its validity in the context of its application in a real life situation, using the example of the UK. Another point of concern is what a firm takes into consideration when evaluating the financing options and why it prefers one alternative over the other, or else looks for optimal capital structure. Other things remaining equal, the rapid growth of borrowing increases the probability of the corporate sector facing difficulties in servicing its debt. Therefore it seems unlikely that corporate capital structure can be fully explained by any one theory, especially given that the theories are not mutually exclusive.

Download or read book Essays on Corporate Financial Management in Shipping written by Arman Gûlnur and published by . This book was released on 2022 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Essays on International Financial Markets Firms Capital Structure and Exporting Decisions written by Udichibarna Bose and published by . This book was released on 2016 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: