Download or read book The Impact of Corporate Governance Structures on the Agency Cost of Debt written by Mr.Jorge A. Chan-Lau and published by International Monetary Fund. This book was released on 2001-12-01 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a stochastic continuous time model of the firm to study how different corporate governance structures affect the agency cost of debt. In the absence of asymmetric information, it shows that control of the firm by debtholders with a minority stake delays the exit decision and reduces the underinvestment problem. Such a governance structure may play an important role in diminishing conflicts between shareholders and debtholders.
Download or read book Corporate Governance and the Cost of Debt written by Marc Schauten and published by . This book was released on 2006 with total page 11 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the relation between the quality of corporate governance and the cost of debt. This study is based on the idea that debt holders take a firm's corporate governance into account when estimating its default risk. A higher quality would imply a lower cost of debt. The methodology of our study is comparable to Sengupta (1998). We use the Deminor Rating for the year 2000 as a proxy for the quality of corporate governance performance of the 300 largest European firms (FTSE Eurotop 300). Deminor Rating bases its score on approximately 300 criteria, which can be subdivided into four corporate governance categories: rights and duties of shareholders; range of takeover defences; disclosure on corporate governance; and board structure and functioning. As a proxy for the cost of debt we use the yield of 77 bonds issued in the year 2001. After adjusting for issuer characteristics, issue characteristics and market characteristics, we find that corporate governance performance is negatively related to the cost of debt. It shows that firms with strong corporate governance have lower cost of debt financing while firms with a relatively weak corporate governance performance are associated with higher cost of debt financing, with a difference of about 1.4%. The findings support the idea that debt holders use the quality of corporate governance in their assessment of risk profiles of firms. Our results imply - given the in general found positive correlation between corporate governance and equity related measures - good corporate governance pays off for both equity and debt holders.
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 Tax Avoidance and Capital Structure written by Alessandro Gabrielli and published by Springer Nature. This book was released on 2023-05-23 with total page 103 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a comprehensive overview of the implications of tax avoidance for a firm’s capital structure, highlighting the key role played by free cash flow and agency conflicts. First, the book provides an outline of the theories and empirical evidence concerning the role of taxes in the Theory of Capital Structure. It reviews the studies investigating the relationship between agency conflicts and capital structure. The book explores the role of free cash flow and agency conflicts in the relationship between tax avoidance and capital structure. In the final section, the results of an empirical investigation conducted on a sample of U.S. public firms are also presented. The empirical research examines whether and how tax avoidance is associated with debt covenant violation across the stages of the corporate life cycle. Specifically, the research uses the concept of the corporate life cycle stage to analyse whether and how the association between tax avoidance and debt covenant violation varies in different agency settings. Consistent with the hypotheses drawn on the Agency Theory, the findings of the empirical research suggest life cycle stages moderate the association between tax avoidance and debt covenant violation. Overall, this book sheds light on the potential implications of tax avoidance activities for a firm’s capital structure. The book will be of interest to both experienced and early-stage scholars interested in the topic. Moreover, the book will also be of interest to policymakers, investors, analysts, lenders, and other market participants.
Download or read book The Impact of Corporate Governance Structures on the Agency Cost of Debt written by Jorge A. Chan-Lau and published by . This book was released on 2001 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Agency Costs of Stakeholders and Corporate Finance written by Bing Yu and published by . This book was released on 2009 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: Agency cost is a major factor that constrains corporate finance decision making. Current corporate governance theory focuses primarily on agency costs of managers and existing literature studies extensively on this aspect. This dissertation studies agency costs from a unique point of view: it addresses the agency costs of creditors and employees. It tests the relationship between creditor rights as well as employee rights and corporations' financing and dividend payment decisions across countries. Based on a sample of 182, 182 firm-year observations from 21,663 unique firms over 52 countries, this study uses the year- and industry-fixed effects Tobit model to test the impacts of creditor rights and labor rights on debt ratio in different countries. The empirical results reveal a positive relationship between employee rights and firms' use of debt and a negative relationship between creditor rights and firm debt ratio. Such relationships hold valid when tests are implemented by using pooled country sample, country mean of residuals, and different country-group sub-samples. The results imply that in countries where employee rights are high, shareholders will use more debt obligation to reduce possibility of exploitation by employees whereas in countries where creditor rights are high, it is harder for shareholders to get a favorable debt contract and they will reduce the use of debt capital. Running fixed effects Logit and Tobit models, this study also documents that labor rights are negatively related to firms' decision to pay dividends and dividend payment amounts. This relationship is reinforced to be more salient in civil law countries where shareholder rights are weak. The empirical results are robust by controlling for sample selection bias, test model specification, and a series of country-level control variables. The explaining power of the major creditor rights and labor rights variables keeps significant statistically, implying that the empirical results remain valid after taking country-specific economic characteristics into account across countries. This is the first study that examines agency costs of employees in corporate finance context explicitly. It takes all stakeholders into account when studying agency problems and sheds light on the interaction relationship among shareholders, creditors, and employees across countries. The empirical results of this study provide a new perspective to interpret international variations in financial leverage and dividend policy in the world.
Download or read book Corporate Governance written by Bob Tricker and published by . This book was released on 2012 with total page 546 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The COVID 19 Impact on Corporate Leverage and Financial Fragility written by Sharjil M. Haque and published by International Monetary Fund. This book was released on 2021-11-05 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
Download or read book The Evolution of Debt written by Charles K. Whitehead and published by . This book was released on 2009 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: The traditional agency cost framing of the firm is premised on the low-cost ability of banks to monitor borrowers and enforce loan covenants in order to mitigate credit risk. Covenants and monitoring constitute a principal governance function of debt, whose effectiveness is tied to the historical, close relationship between lenders and borrowers. But, clearly, change is afoot. Lenders are now better able to buy and sell loans and other credit instruments, potentially resulting in lower cost alternatives - such as loan trading and credit derivatives - to the traditional reliance on covenants and monitoring. What has been the impact on corporate governancelsquo; In this Article, I argue that the governance function of debt has evolved in line with change in the credit market, reflecting greater liquidity in private credit instruments and the impact of new costs and benefits on capital structure and the institutions of corporate governance that extend from it. One outcome for debt governance may be a shift from the traditional dependence on covenants and monitoring to a greater reliance on liquid credit instruments. As new sources of risk capital enhance a firm's ability to opt in favor of private equity, I also raise the possibility of an alternative capital and corporate governance structure - based on a shift from public to private capital, in the case of equity; and private to increasingly public capital, in the case of debt - driven by costs and benefits beyond those within the traditional framing. Current turmoil in the credit market has potentially called into question the viability of a governance structure that relies, in part, on private credit. Greater liquidity has prompted an increase in agency costs and other market frictions that may overwhelm the associated benefits. New regulation may be necessary, and that regulation may affect growth in the credit market. I offer some preliminary lessons for private credit and debt governance.
Download or read book Directors Remuneration written by Study Group on Directors' Remuneration and published by . This book was released on 1995 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: A complete copy of the Report including the Code of Best Practice. The Study Group on Director's Remuneration was set up on the initiative of the CBI in January 1995 in response to public and shareholder concerns about pay and other remuneration of company directors in the United Kingdom. The report covers code of best practice, main action points, remuneration committees, disclosure, remuneration policy, service contracts and compensation, privatised utilities.
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 Financial Management and Analysis written by Frank J. Fabozzi and published by John Wiley & Sons. This book was released on 2003-07-25 with total page 1023 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Management and Analysis, Second Edition covers many important financial topics that are neglected elsewhere--from raising funds via securitization to managing a financial institution. This book provides valuable insights into many major aspects of financial management and analysis, and includes expert advice, real-world examples, useful charts and graphs, and incisive end-of-chapter questions that help develop the skill set necessary to deal with the important financial problems encountered in today's business world.
Download or read book Family Firms in Latin America written by Claudio G. Müller and published by Routledge. This book was released on 2018-09-03 with total page 231 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is one of the first books of its kind to highlight family firms in a Latin American context, helping students to understand the distinctive nature and challenges of Latin American family businesses and how these issues compare to family businesses around the world. Building on their experience in teaching, research, speaking, and consulting on the subject of family firms in Latin America, the editors explain the need to implement and adapt traditional frameworks in the changing Latin American reality. Each section provides background on the most important topics in the management of family firms, including strategy, entrepreneurship, and performance, followed by illustrative cases and a discussion of how this knowledge is similar to or different from other parts of the world. The book’s clear writing and in-depth approach will appeal to undergraduate and graduate students of international business, business in Latin America, and family business.
Download or read book International Corporate Governance written by Kose John and published by Emerald Group Publishing. This book was released on 2011-03-31 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt: Presents research on corporate governance from a number of countries across the world, including the United States, Spain, Malaysia, Israel and others. This title examines many important corporate governance mechanisms, such as board characteristics, ownership structure, legal protection of shareholders, and annual general meetings.
Download or read book The Costs and Benefits of Ownership written by Sanford J. Grossman and published by . This book was released on 1984 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Corporate Governance Strengthening Latin American Corporate Governance The Role of Institutional Investors written by OECD and published by OECD Publishing. This book was released on 2011-07-01 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report reflects long-term, in-depth discussion and debate by participants in the Latin American Roundtable on Corporate Governance.
Download or read book Advances in Financial Economics written by Kose John and published by Emerald Group Publishing. This book was released on 2013-12-18 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt: Advances in Financial Economics Vol. 16 contains a set of empirical papers by a set of global scholars who examine corporate governance and market regulation from a variety of perspectives.
