Download or read book The Agency Costs of Equity written by Oded Sarig and published by . This book was released on 1983 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Eliminating the Agency Costs of Equity Capital with Executive Stock Options written by Robert A. Haugen and published by . This book was released on 1979 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Agency Costs of Overvalued Equity written by Michael C. Jensen and published by . This book was released on 2009 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: I define and analyze the ...
Download or read book Agency Costs and Accounting Quality Within an All equity Setting written by David Cabán and published by . This book was released on 2015 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate if all-equity firms are a heterogeneous group as it relates to agency costs and accounting quality. All-equity firms are a unique group of firms that choose a "corner solution" as their capital structure. Extant research, supported by well-established theories such as trade-off theory, free cash flow theory, and Jensen's (1986) control hypothesis, generally conclude that agency conflicts motivate such structure. Research also supports the alternative argument that poor accounting quality makes debt so prohibitive that such firms are driven to this capital structure. I propose that an all-equity structure is not necessarily symptomatic of agency conflicts and poor accounting quality overall. I investigate if different motivations, within an all-equity setting, reflected by free cash flows and growth opportunities, result in different levels of agency cost and accounting quality. By anchoring on theories that link implicit costs of debt to free cash flow levels and growth opportunities, I hypothesize that free cash flows and growth opportunities are strongly linked to the justification or lack thereof for the pursuit of such strategy. I hypothesize and show that firms in the extremes of the free cash flow to growth rate spectrum exhibit significantly different levels of agency cost and accounting quality within the all-equity setting. These results support my main prediction that there exists agency costs and accounting quality differences within the all-equity setting which are associated with free cash flow levels and growth opportunities and that the pessimistic conclusions for pursuing an all-equity strategy reached by prior research should not be generalized to all such firms.
Download or read book Agency Costs of Equity and Accounting Conservatism written by Tan (Charlene) Lee and published by . This book was released on 2014 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates how conservative accounting system can mitigate the agency problem between the manager and shareholders of a firm, which arises from information asymmetry. In this study I assume that the firm has a privileged right to engage in an irreversible discrete project, i.e., it possess a valuable option to delay investment. Using standard real options arguments, I first show the manager tends to invest earlier than optimal, when she owns information advantage over shareholders of the firm. In other words, the firm incurs agency costs of equity because the manager tends to over-invest. I then demonstrate that the application of accounting conservatism will induce the manager to report her private information more truthfully, and thus reduce the agency costs of equity. In addition, the reduction on agency costs will be more profound when the cash-flows of the investment project are highly uncertain.
Download or read book The Agency Cost of Alternative Debt Instruments Classic Reprint written by Antonio Mello and published by Forgotten Books. This book was released on 2018-02-25 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from The Agency Cost of Alternative Debt Instruments It is now commonly recognized that a firm's capital structure can affect its value through the incentives that are created for the equity holders in favor of one or another investment and operating policy. A place has therefore been created for a positive theory of capital structure. Missing, however, from the literature on agency costs in finance have been models that enable us to measure the effects of capital structure on the value of the firm's assets. In this paper we show how contingent claims models can be used to measure and compare the agency costs of different forms of debt-fixed rate and indexed. The model can be used to determine the optimal indexing structure and the optimal parameters of the debt contract. The case of index linked debt that we study in this paper is a commodity bond. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Download or read book Agency Costs Asset Specificity and the Capital Structure of the Firm written by Jon Vilasuso and published by . This book was released on 2001 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a dynamic model that incorporates the insights of both the agency cost and asset specificity literature aboutcorporate finance. In general, we find that neither can be ignored, and that the optimal capital structure minimizes agency cost and asset specificity considerations. A key finding is that the conditions most favorable for reducing transaction costs due to asset specificity are the same as those for reducing the agency costs of debt. Empirically, we find that agency costs and asset specificity are significant determinants of a firm's capital structure in the transportation equipment and the printing and publishing industries.
Download or read book Venture Capital in Europe written by Greg N. Gregoriou and published by Elsevier. This book was released on 2011-04-01 with total page 433 pages. Available in PDF, EPUB and Kindle. Book excerpt: Until recently, only the United States had an active venture capital market. This is changing rapidly, as many other countries have experienced rapid growth in venture capital financing over the past five years. This book contains new scientific articles showcasing the latest research on venture capital in Europe. Venture capital investment remains a hot topic with portfolio managers, individual investors, academics worldwide. This book examines in detail all the major issues regarding venture capital investment: contracting, financing, regulation, valuation, etc. and identifies new trends in the venture capital arena. Features a foreword by Josh Lerner. *The only book in which academics from around the world present the latest research on venture capital in Europe *Covers all of Europe as well as including overview papers about venture capital industry, public and private venture capital, valuation, financing, contracting, structuring, regulation, etc. *Comprehensive, authoritative coverage
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.
Download or read book Agency Costs of Free Cash Flow and the Effect of Shareholder Rights on the Implied Cost of Equity Capital written by Kevin C. W. Chen and published by . This book was released on 2009 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we examine the effect of shareholder rights on reducing the cost of equity and the impact of agency problems from free cash flow on this effect. We find that firms with strong shareholder rights have a significantly lower implied cost of equity after controlling for risk factors, price momentum, analysts' forecast biases, and industry effects than do firms with weak shareholder rights. Further analysis shows that the effect of shareholder rights on reducing the cost of equity is significantly stronger for firms with more severe agency problems from free cash flows.
Download or read book Agency Costs and Investment Behaviour written by and published by CEPS. This book was released on with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Agency Cost Investment Opportunity and the Rights Equity Issue Decision Evidence from an Emerging Market written by Jijo Lukose and published by . This book was released on 2005 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the Indian market, majority of the subsequent equity issues are sold through rights offerings (ROs) and ROs are associated with positive market reaction. We show that this positive reaction is mainly concentrated among growth firms having better investment opportunity. In the long-run, issuers under-perform a carefully selected matching portfolio. This underperformance is significant in comparison with a bootstrapped empirical distribution of pseudo portfolios. This evidence is robust to various estimation procedures and statistical tests. It is interesting to note that the operating performance measures also behave similarly and it is significantly related to the stock performance. Our analysis establishes that agency costs and over-investment hypothesis can better explain the deteriorating performance.
Download or read book Finance written by John Eatwell and published by Palgrave Macmillan. This book was released on 1989-11-01 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an excerpt from the 4-volume dictionary of economics, a reference book which aims to define the subject of economics today. 1300 subject entries in the complete work cover the broad themes of economic theory. This extract concentrates on finance.
Download or read book A Theory of the Firm written by Michael C. Jensen and published by Harvard University Press. This book was released on 2003-09-30 with total page 342 pages. Available in PDF, EPUB and Kindle. Book excerpt: This collection examines the forces, both external and internal, that lead corporations to behave efficiently and to create wealth. Corporations vest control rights in shareholders, the author argues, because they are the constituency that bear business risk and therefore have the appropriate incentives to maximize corporate value. Assigning control to any other group would be tantamount to allowing that group to play poker with someone else's money, and would create inefficiencies. The implicit denial of this proposition is the fallacy of the so-called stakeholder theory of the corporation, which argues that corporations should be run in the interests of all stakeholders. This theory offers no account of how conflicts between different stakeholders are to be resolved, and gives managers no principle on which to base decisions, except to follow their own preferences. In practice, shareholders delegate their control rights to a board of directors, who hire, fire, and set the compensation of the chief officers of the firm. However, because agents have different incentives than the principals they represent, they can destroy corporate value unless closely monitored. This happened in the 1960s and led to hostile takeovers in the market for corporate control in the 1970s and 1980s. The author argues that the takeover movement generated increases in corporate efficiency that exceeded $1.5 trillion and helped to lay the foundation for the great economic boom of the 1990s.
Download or read book Case Theory in Business and Management written by Evert Gummesson and published by SAGE. This book was released on 2017-01-25 with total page 438 pages. Available in PDF, EPUB and Kindle. Book excerpt: ′This meticulous book submits research and the research process to deep scrutiny. It debunks the unhelpful dichotomy between quantitative and qualitative research and highlights the great value of multi-method and interactive research, approaches that have greatly deepened our thinking.′ – Professor Adrian Payne, University of New South Wales, Australia / Professor Pennie Frow, University of Sydney Setting out to dispel the argument that case study research lacks the science, theory and therefore validity of other forms of research, Evert Gummesson combines many decades of experience as both a renowned scholar and a reflective practitioner to effectively bridge the divide between case theory and how it is applied in practice. Bringing the fundamental strengths of cases to the fore, Gummesson introduces the ′Case Theory′ concept as an expanded version of case study research which includes both methodology and the types of results that emerge by: Guiding the reader in the theoretical and philosophical underpinning Demonstrating how to translate theory to pertinent research practice that address the real and consequential issues in business and management today. This book will appeal to students, academics and researchers who are interested in the science and philosophy behind case study research as well as the methodology and a thought-provoking read for anyone who wants to be challenged about their belief of case study theory.
Download or read book Managerial Discretion Agency Costs and Capital Structure written by Paul D. Childs and published by . This book was released on 2008 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a dynamic continuous-time model, we examine the impact of a manager-shareholder conflict over the choice of investment risk on firm value and optimal capital structure. The manager's optimal investment risk policy is substantially different from the policy that maximizes equity or total firm value. The resulting agency costs of equity are many times larger than the agency costs of debt. Among a number of important implications, we find that managerial risk-aversion decreases the agency costs of equity. We also find that when equityholders have control rights over financing decisions, optimal leverage may increase relative to optimal leverage when investment risk is chosen to maximize total firm value. Additionally, greater managerial equity compensation may exacerbate the manager-stockholder conflict over investment policy, and in spite of higher agency costs of equity, may increase optimal leverage. Finally, we find that an increase in risk encourages the manager to pursue a more conservative investment strategy, which increases the agency costs of equity. Managerial risk-aversion, however, acts to mitigate this effect of risk on the agency costs of equity.
Download or read book Short Introduction to Corporate Finance written by Raghavendra Rau and published by Cambridge University Press. This book was released on 2017-01-11 with total page 196 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Short Introduction to Corporate Finance provides an accessibly written guide to contemporary financial institutional practice. Rau deploys both his professional expertise and experience of teaching MBA and graduate-level courses to produce a lively discussion of the key concepts of finance, liberally illustrated with real-world examples. Built around six essential paradigms, he builds an integrated framework covering all the major ideas in finance over the past half-century. Ideal for students and practitioners alike, it will become core reading for anyone aspiring to become an effective manager.
