Download or read book Three Essays on Corporate Debt Financing written by Mahsa Somayeh Kaviani and published by . This book was released on 2016 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first of three essays, we study the relationship between corporate debt structures and the strength of creditor rights. Firms use a more concentrated debt-type structure as a reaction mechanism to stronger creditor rights. We show that managers form more concentrated debt structures in response to stronger creditor rights in order to first, reduce bankruptcy costs and second, to provide more monitoring incentives for creditors. Across 46 countries, we document that firms have more concentrated debt-type structures in countries with stronger creditor rights. Based on an examination of the cross-sectional heterogeneity of firms to different creditor rights regimes, we confirm our two proposed mechanisms. This study extends the literature of debt structure to an international setting and is the first to document the effect of cross-country legal and institutional determinants on the choice of debt structures. In the second essay, we investigate how uncertainty about economic policies influence corporate credit spreads. We find a large and positive association between corporate credit spreads and a news-based index of policy uncertainty. We document that a one standard deviation increase in policy uncertainty results in 25 basis points increase in the credit spreads of corporate bonds controlling for bond, firm and macro-economic variables. We find that the influence of policy uncertainty on corporate credit spreads differs across firms and is more pronounced for firms with higher investment irreversibility and dependence on government spending. We also document a larger impact of policy uncertainty during economic recessions. Our results show that not only firm-level default probabilities, but also bond-CDS bases increase in response to elevated policy uncertainty. The third and final essay empirically measures the financial and economic costs (benefits) to firm value associated with deteriorations or improvements in the firm’s credit quality. We document that firms incur economically large and statistically significant costs to their values following credit-rating deteriorations. Consistent with an asymmetric effect, we find significant but smaller firm-value benefits associated with credit-rating upgrades. The financial costs to a firm’s market value associated with each notch downgrade to the investment and speculative grade categories are 7.1% and 14.8%, respectively, and these costs are generally larger than the economic costs to the firm value from credit rating downgrades. Using a continuous KMV distance to default model, we conclude that deteriorations (improvements) in a model-generated credit rating quality can also adversely (positively) affect firm value. Our findings have implications for corporate financing and leverage decisions, and for the unresolved underleverage puzzle (Graham, 2001).

Download or read book Three essays on corporate investments and debt financing written by Nam Hoang Nguyen and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on the Corporate Debt Choice written by Matteo P. Arena and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the determinants of the corporate debt choice between different forms of debt financing and different countries. By examining the most extensive sample of U.S. debt issues to date, Essay 1 shows that firms that issue 144A debt are significantly different from firms that privately place non-bank debt without using the 144A rule. I also find that traditional private placements rather than bank loans are the favorite debt source for firms with good credit quality that cannot access the public market because of flotation costs and information asymmetry. Essay 2 examines how governance provisions that affect the cost of debt are related to the corporate debt choice. I find that firms with fewer takeover defenses and larger blockholder ownership are more likely to issue private debt. This result is consistent with the hypothesis that private debt claimants can reduce the expected negative impact of takeovers on debtholder value by enforcing stricter covenants or by renegotiating debt in case of takeover. Essay 3 examines the external debt financing choices of multinational firms by using a unique international dataset of firm-level debt offerings. I show that tax-based incentives, country-specific investor preferences, and difference in legal regimes across countries influence multinational firms in their debt location choice.

Download or read book Three Essays in Empirical Corporate Finance written by Shage Zhang and published by . This book was released on 2012 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Corporate Finance written by Hongchao Zeng and published by . This book was released on 2012 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays in corporate finance. In the first essay, using the presence of business combination (BC) laws to proxy for the monitoring strength of the takeover market, we examine how an active takeover market affects the level and valuation of corporate cash holdings. After accounting for potential endogeneity of state incorporation, we find that firms incorporated in states without BC laws hold significantly more cash than those incorporated in states with BC laws. We also find that the value of cash holdings used by firms to defend themselves against unwanted takeovers in the presence of an active takeover market is not discounted by investors. Our findings suggest a substitution effect between legal antitakeover protection and firms' use of cash protection. However, there is no evidence that these cash holdings lead to value destruction. Firms may use corporate payouts to signal internal governance quality and avoid a market discount placed on cash holdings. In the second essay, using the Herfindahl-Hirschman Index (HHI), the industry price-cost margin, the number of firms within an industry, and the level of import penetration to gauge the intensity of product market competition, we find that the speed of capital structure adjustment for firms in competitive industries is significantly faster than for firms in non-competitive industries. Further analysis reveals that this effect is driven solely by the capital structure movements of over-levered firms. While over-levered firms in competitive industries face higher levels of investment needs relative to those in non-competitive industries, they are significantly less likely to use debt financing and to deliberately deviate from target. In the third essay, we find that cash has a negative impact on the future market share growth of the old firms, evidence that can better explain the unwillingness of such firms to hold precautionary cash as they face increasingly more volatile cash flows in an imperfect capital market. Furthermore, we show that the relational strength between cash and product market performance evolves in a way that reflects a changing composition of manufacturing firms which progressively tilts toward young firms.

Download or read book Three Essays on Short Term Debt Financing written by Nandkumar Nayar and published by . This book was released on 1988 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Empirical Corporate Finance written by Brandon Julio and published by ProQuest. This book was released on 2007 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt: The second essay follows up on the first by investigating whether debt repurchase activity is consistent with the existence of an optimal capital structure. I find that the timing and size of debt repurchases are consistent with trade-off theories of capital structure. Specifically, the likelihood and size of debt repurchases is increasing in a firm's deviation from its estimated target. The positive abnormal returns around the announcement of repurchases are increasing in the deviation from the target debt level, consistent with an optimal capital structure.

Download or read book Three Essays on Lending and Corporate Debt Structure written by Haekwon Lee and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three essays on corporate debt policy written by Glenn E. Morgan and published by . This book was released on 1991 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Corporate Debt Capital Structure and Managerial Entrenchment written by Hao Wang and published by . This book was released on 2007 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt: "In the third essay, we develop a valuation model that simultaneously captures credit risk and interest rate risk, and apply it to study the valuation of putable corporate bonds. We ask what risks put features provide insurance against in practice - credit risk, liquidity risk or interest rate risk - and to what degree? We find that they reduce the components of all three risks in bond spreads. The most important, perhaps surprisingly is default or spread risk, followed by term structure risk. The reduction in the liquidity component is present but rather small." --

Download or read book Three Essays in Corporate Finance written by Hoontaek Seo and published by . This book was released on 2009 with total page 210 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on Exchangeable Debt Financing written by Anna Nathan Danielova and published by . This book was released on 2004 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays in Corporate Finance written by Bernardino Manuel Pereira Adão and published by . This book was released on 1995 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Three Essays on the Role of Political Connections in Corporate Finance written by Aoran Zhang and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation investigates the influence of political connections on corporate financing activities in China. The thesis consists of three chapters. In the first essay, we explore whether and how political connections affect the likelihood of completing a cross-border M&A deal for Chinese publicly listed, but privately-owned enterprises (POEs) and the resulting firm performance. In line with the proposed political connection trade-off theory, we demonstrate that POEs with politically connected top managers are more likely to complete a cross-border M&A deal than POEs with no such connections, but that this comes at the cost of negative announcement returns and subsequent lower accounting performance. These findings support the idea that politically connected top managers engage in empire building behavior at the cost of shareholders' wealth. In the second essay, we examine how political connections influence the likelihood of corporate bond issuance for POEs in China. Using a sample of Chinese POEs from 2007 to 2016, the research shows that politically-connected POEs are more likely to issue corporate bonds as a debt-financing instrument than their non-connected counterparts, and that they achieve lower coupon rates (i.e., lower refinancing costs). On the other hand, this research indicates that corporate bond-issuing POEs in China have weaker corporate governance and a surprisingly higher default probability. Overall, the results show that the corporate bond market in China is strongly distorted by political factors. In the third essay, we study how implicit government guarantees affect the yield spreads of Chinese corporate bonds. We presume that quasi-municipal corporate bonds (so called "Chengtou" bonds), issued by local government financing vehicles (LGFVs), carry an implicit government guarantee. Using a sample of publicly traded corporate bonds between 2010 and 2017, we find that bond investors are significantly less sensitive to bond-specific risks for corporate bonds with an implicit government guarantee: the yield spreads of Chengtou bonds are significantly lower than those of corporate bonds issued by POEs in China. We also find that corporate bonds from Northeast China are riskier than those issued by firms elsewhere in the country. Furthermore, we discover that policy changes introduced by the central government, which were intended to regulate local debt financing activities, significantly reduced the gap in yield spreads between Chengtou bonds and bonds issued by POEs. Overall, the empirical results suggest that implicit government guarantees play a crucial role in corporate debt market and that China's recent policy changes reduce the effectiveness of implicit government guarantees, making corporate bond market more market-oriented.

Download or read book Three Essays in Dynamic Corporate Finance written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of contro.

Download or read book Three Essays in Corporate Finance written by Jeong Hwan Lee and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: My model yields the following main results: (1) Equity issues are pro-cyclical, and concentrated for small, low profit, and large investment demand firms in earlier stage of economic upturns. (2) Payouts peak in later stages of upturns and co-move positively with equity issues; (3) Debt policies move counter-cyclically, and leverage ratios after debt issuance and retirement are even higher during economic downturns. My comparative static analysis predicts pro-cyclical debt policy for financially constrained firms, and pervasively conservative use of debt for firms expecting financial market shutdowns, a sharp profitability drop, or a longer stay in economic downturns.

Download or read book Three Essays on Equity Financing written by Vikram Nanda and published by . This book was released on 1991 with total page 198 pages. Available in PDF, EPUB and Kindle. Book excerpt: