Download or read book A Theory of Debt Maturity written by Douglas W. Diamond and published by . This book was released on 2012 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: Debt maturity influences debt overhang: the reduced incentive for highly- levered borrowers to make real investments because some value accrues to debt. Reducing maturity can increase or decrease overhang even when shorter-term debt's value depends less on firm value. Future overhang is more volatile for shorter-term debt, making future investment incentives volatile and influencing immediate investment incentives. With immediate investment, shorter-term debt typically imposes lower overhang; longer-term debt can impose less if firm value is more volatile in bad times. For future investments, reduced correlation between the value of assets-in-place and profitability of investment increases the overhang of shorter-term debt.

Download or read book Debt Maturity and the Use of Short Term Debt written by Sophia Chen and published by International Monetary Fund. This book was released on 2019-02-05 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: The maturity structure of debt can have financial and real consequences. Short-term debt exposes borrowers to rollover risk (where the terms of financing are renegotiated to the detriment of the borrower) and is associated with financial crises. Moreover, debt maturity can have an impact on the ability of firms to undertake long-term productive investments and, as a result, affect economic activity. The aim of this paper is to examine the evolution and determinants of debt maturity and to characterize differences across countries.

Download or read book International Loans Bonds Guarantees Legal Opinions written by Philip R. Wood and published by Sweet & Maxwell. This book was released on 2007 with total page 493 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume provides coverage of syndicated bank credit agreements and loan transfers, international bond issues including equity-linked bonds, note programs and high yield notes, bondholder trustees and collective action clauses and more.

Download or read book The Maturity Structure of Debt Determinants and Effects on Firms Performance Evidence from the United Kingdom and Italy written by Fabio Schiantarelli and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: January 1997 Firms tend to match assets with liabilities, and more profitable firms have more long-term debt. Long-term debt has a positive effect on firms' performance, but this is not true when a large fraction of that debt is subsidized. The authors empirically investigate the determinants and consequences of the maturity structure of debt, using data from a panel of UK and Italian firms. They find that in choosing a maturity structure for debt, firms tend to match assets and liabilities, as both conventional wisdom and some recent theoretical models suggest. They conclude that more profitable firms (as measured by the ratio of cash flow to capital) tend to have more long-term debt. This finding is consistent with the dominant role played by firms' fear of liquidation and loss of control associated with short-term debt. It may also reflect the willingness of financial markets to provide long-term finance only to quality firms. The data do not support the hypothesis that short-term debt, through better monitoring and control, boosts efficiency and growth -rather, the opposite can be concluded. In both countries, the data suggest a positive relationship between initial debt maturity and the firms' subsequent medium-term performance (i.e., profitability and growth in real sales). In both countries total factor productivity (TFP) depends positively on the length of debt maturity when the maturity variable is entered both contemporaneously and lagged. But in Italy the positive effect of the length of maturity on productivity is substantially reduced or even reversed when the proportion of subsidized credit increases. The authors document the relationship between firms' characteristics and their choice of shorter or long-term debt by estimating a maturity equation and interpreting the results in light of insights from theoretical literature, and by analyzing the effects of maturity on firms' later performance in terms of profitability, growth, and productivity; assess how TFP depends on the degree of leverage and the proportion of longer and shorter-term debt; and analyze the relationship between firms' debt maturity and investment. This paper--a product of the Finance and Private Sector Development Division, Policy Research Department--is part of a larger effort in the department to study the effects of financial structure on economic performance. The study was funded by the Bank's Research Support Budget under the research project Term Finance: Theory and Evidence (RPO 679-62).

Download or read book Debt Maturity and the Back to the wall Theory of Corporate Finance written by George Fenn and published by . This book was released on 1991 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Maturity Structure of Debt written by Fabio Schiantarelli and published by World Bank Publications. This book was released on 1997 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Deal Decade Handbook written by Margaret M. Blair and published by Brookings Institution Press. This book was released on 2010-12-01 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this companion handbook to The Deal Decade: What Takeovers and Leveraged Buyouts mean for Corporate Governance, Margaret Blair and Girish Uppal present summary statistics and details on the corporate restructuring movement of the 1980s. The authors summarize data from private buyouts, junk bond issuances, and aggregate changes in corporate debt. They also report on the changing patterns of corporate ownership, shareholder activism, and changes in the law affecting takeovers. Finally, they put the 1980s into historical context by presenting data tracking merger and acquisition activity since 1955.

Download or read book Why Do Firms Market Time Debt Maturity A Trade Off Theory Based Explanation written by Ziemowit Bednarek and published by . This book was released on 2015 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Evidence shows that firms market time their debt maturity. Specifically, maturity is found to be inversely proportional to the term spread (the difference between long and short-term Treasury yield). That is, firms issue short-term debt when the term spread is large and they increase maturity as the term spread decreases. In this article, we build a model explaining the market timing phenomenon using the trade-off theory of capital structure. Our explanation relies on the balance between the bankruptcy cost and the debt issuance transaction cost. When the term spread is large, bankruptcy costs outweigh transaction costs. Firms reduce debt maturity as it lowers bankruptcy probability. In the same spirit, firms increase maturity to lower transaction cost when the term spread is small. With our model, we also link maturity with leverage, loss given default, and frequency of capital structure adjustment. Our result does not depend on the presence of either liquidity shocks or agency costs or imperfect information. Finally, we empirically corroborate our theory.

Download or read book Credit Information Quality and Corporate Debt Maturity written by Marco Sorge and published by World Bank Publications. This book was released on 2007 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides new theoretical and empirical evidence suggesting that the quality of credit information may be a key element in explaining the maturity structure of corporate debt around the world. In markets with poor credit information and hence a high degree of uncertainty about borrower quality, the authors find suboptimal equilibria in which short-term contracts are preferred either as a hedge against uncertainty to limit losses in bad states (in the symmetric information case) or as a screening device to learn about borrower credit quality in the course of a repeated lending relationship (in the asymmetric information case). The results of the model are supported by the econometric analysis of panel data from both industrial and developing economies. The authors find that countries with better quality of credit information (for example, as a result of improvements in credit reporting systems or accounting standards) are characterized by a higher share of long-term debt as a proportion of total corporate debt ceteris paribus. The findings suggest that promoting institutions and policies to improve the quality of credit information is an important prerequisite for increasing access of firms to long-term finance.

Download or read book A Theory of Credit Rationing and the Maturity Structure of Debt written by Steven A. Sharpe and published by . This book was released on 1989 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Management of the Nominal Public Debt Theory and Applications written by Mr.Guillermo Calvo and published by International Monetary Fund. This book was released on 1990-12-01 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Optimal management of the public debt is explored in a context where economic policy is continuously revised because, when the public debt is non—indexed, policy—makers are tempted to use inflation in order to reduce the real value of the public debt. The model’s implications are explored following two approaches. First, the effects of various exogenous disturbances are examined by means of numerical simulations. Secondly, the analysis explores—for Italy, Ireland, and the United States—if the model’s implications concerning the maturity structure of government debt are consistent with actual experience.

Download or read book A Gap filling Theory of Corporate Debt Maturity Choice written by Robin Marc Greenwood and published by . This book was released on 2008 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: "We argue that time-series variation in the maturity of aggregate corporate debt issues arises because firms behave as macro liquidity providers, absorbing the large supply shocks associated with changes in the maturity structure of government debt. We document that when the government funds itself with relatively more short-term debt, firms fill the resulting gap by issuing more long-term debt, and vice-versa. This type of liquidity provision is undertaken more aggressively: i) in periods when the ratio of government debt to total debt is higher; and ii) by firms with stronger balance sheets. Our theory provides a new perspective on the apparent ability of firms to exploit bond-market return predictability with their financing choices"--National Bureau of Economic Research web site

Download or read book Executive Compensation and Shareholder Value written by Jennifer Carpenter and published by Springer Science & Business Media. This book was released on 2013-04-17 with total page 159 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive compensation has gained widespread public attention in recent years, with the pay of top U.S. executives reaching unprecedented levels compared either with past levels, with the remuneration of top executives in other countries, or with the wages and salaries of typical employees. The extraordinary levels of executive compensation have been achieved at a time when U.S. public companies have realized substantial gains in stock market value. Many have cited this as evidence that U.S. executive compensation works well, rewarding managers who make difficult decisions that lead to higher shareholder values, while others have argued that the overly generous salaries and benefits bear little relation to company performance. Recent conceptual and empirical research permits for the first time a truly rigorous debate on these and related issues, which is the subject of this volume.

Download or read book Capital Markets and Financial Intermediation written by Colin Mayer and published by Cambridge University Press. This book was released on 1995-09-29 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial intermediation is currently a subject of active research on both sides of the Atlantic. The integration of European financial markets, in particular, highlights several important issues. In this volume, derived from a joint CEPR conference with the Fundacion Banco Bilbao Vizcaya (BBV), leading academics from Europe and North America review 'state-of-the-art' theories of banking and financial intermediation and discuss their policy implications. The principal focus is on the risks of increased competition, the appropriate regulation of banks, and the differences between Anglo-American and Continental European forms of financial markets. Relationship banking, stock markets and banks, banking and corporate control, financial intermediation in Eastern Europe, monetary policy and the banking system, and financial intermediation and growth are also discussed.

Download or read book The Role of Long Term Finance written by Gerard Caprio and published by World Bank Publications. This book was released on 1997 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Global Waves of Debt written by M. Ayhan Kose and published by World Bank Publications. This book was released on 2021-03-03 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

Download or read book Public Debt Management written by Rudiger Dornbusch and published by Cambridge University Press. This book was released on 1990-11-30 with total page 384 pages. Available in PDF, EPUB and Kindle. Book excerpt: As Europe proceeds towards economic and monetary union, fiscal convergence and the prospect of a common money are at the centre of discussion. This volume from the Centre for Economic Policy Research brings together theoretical, applied and historical research on the management of public debt and its implications for financial stability. Gale fills a gap in the literature, using a consistent framework to investigate the welfare economics of public debt, while Calvo and Guidotti analyse the trade-off between indexation and maturity when it comes to minimizing debt service. Confidence crises have become relevant again in view of the high debt ratios in countries such as Belgium, Italy and Ireland. Alesina, Prati and Tabellini develop a formal model of the propagation of a debt run and use it to interpret Italian debt panics. Giavazzi and Pagano concentrate on how inappropriate debt management can precipitate a run on the currency while Makinen and Woodward review a broad sweep of historical experience.