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Author: Clecio Jose Bortoni Dias
Publisher:
ISBN:
Category :
Languages : en
Pages : 74
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Book Description
Author: Clecio Jose Bortoni Dias
Publisher:
ISBN:
Category :
Languages : en
Pages : 74
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Book Description
Author: Praveen Kumar
Publisher:
ISBN:
Category :
Languages : en
Pages : 56
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Book Description
We examine the joint optimization of financial leverage and irreversible capacity investment in a real options framework with risky debt and endogenous interest costs. Higher capacity, ceteris paribus, increases operating leverage and default probability, but lowers ex post adjustment costs and generates larger tax shields. A key insight is that financial leverage and capacity are substitutes in the debt market equilibrium. We develop novel predictions about the effects of capital adjustment costs, operating costs, and uncertainty on optimal financial leverage and capacity that may potentially help explain ambiguous empirical results in the literature regarding the determinants of capital structure and investment.
Author: Yongqiang Chu
Publisher:
ISBN:
Category :
Languages : en
Pages : 39
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Book Description
This paper develops a dynamic trade-off model to study the interaction between product market competition and capital structure. Firms make interdependent entry, investment, financing and default decisions. Trade-off between tax benefits, bankruptcy costs and strategic considerations in the product market determines optimal capital structure. The model delivers the following results that are consistent with empirical evidences: (1) Firms may have non-linear and non-monotonic reactions to their competitors' change of leverage, depending on their original levels of leverage; (2) The within-industry variation of leverage can be large, because incumbents and entrants use leverage strategically differently; (3) Entrants have higher leverage than incumbents in equilibrium, because the incumbents use lower leverage to gain strategic advantages over the entrants.
Author: Leora Klapper
Publisher: World Bank Publications
ISBN:
Category : Business law
Languages : en
Pages : 60
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Book Description
"Using a comprehensive database of firms in Western and Eastern Europe, we study how the business environment in a country drives the creation of new firms. Our focus is on regulations governing entry. We find entry regulations hamper entry, especially in industries that naturally should have high entry. Also, value added per employee in naturally "high entry" industries grows more slowly in countries with onerous regulations on entry. Interestingly, regulatory entry barriers have no adverse effect on entry in corrupt countries, only in less corrupt ones. Taken together, the evidence suggests bureaucratic entry regulations are neither benign nor welfare improving. However, not all regulations inhibit entry. In particular, regulations that enhance the enforcement of intellectual property rights or those that lead to a better developed financial sector do lead to greater entry in industries that do more R & D or industries that need more external finance"--National Bureau of Economic Research web site.
Author: Oliver D. Hart
Publisher: University of British Columbia, Department of Economics
ISBN:
Category : Capital
Languages : en
Pages : 60
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Book Description
Author: Rune Stenbacka
Publisher:
ISBN: 9789515555762
Category : Corporate debt
Languages : en
Pages : 29
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Book Description
Author: Anton Miglo
Publisher: Springer
ISBN: 3319307134
Category : Business & Economics
Languages : en
Pages : 266
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Book Description
This book focuses on microeconomic foundations of capital structure theory. It combines theoretical results with a large number of examples, exercises and applications. The book examines fundamental ideas in capital structure management, some of which are still not very well understood in the business community, such as Modigliani and Miller’s irrelevance result, trade-off theory, pecking-order theory, asset substitution, credit rationing and debt overhang. Chapters also cover capital structure issues that have become very important following the recent financial crisis. Miglo discusses the ways in which financial economists were forced to look critically at capital structure, as the problems faced by many companies stemmed from their financing policies following the crisis. The book also discusses links between capital structure and firm’s performance, corporate governance, firm’s strategy and flexibility, and covers such topics as life cycle approach to capital structure management, capital structure of small and start-up companies, corporate financing versus project financing and examples of optimal capital structure analyses for different companies. This comprehensive guide to capital structure theory will be of interest to all students, academics and practitioners seeking to understand this fast-developing and critical area of business management.
Author: Sergey Tsyplakov
Publisher:
ISBN:
Category :
Languages : en
Pages : 64
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Book Description
This paper presents a continuous time model of a firm that can dynamically adjust both its capital structure and its investment choices. The model extends the dynamic capital structure literature by endogenizing the investment choice as well as firm value, which are both determined by an exogenous price process that describes the firm's product market. Within the context of this model we explore interactions between financial distress costs and debtholder/equityholder agency problems and examine how the ability to dynamically adjust the capital structure choice affects both target debt ratios and the extent to which actual debt ratios deviate from their targets. In particular, we examine how financial distress and the firm's objectives, i.e., whether it makes choices to maximize total firm value versus equity value, influence the extent to which firms make financing choices that move them towards their target debt ratios.
Author: Charles J. Cuny
Publisher:
ISBN:
Category :
Languages : en
Pages : 37
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Book Description
We explore equilibrium corporate capital structure under the tradeoff that additional debt generates the familiar corporate tax benefit, while additional equity generates more information about the value of growth opportunities, allowing a more precise estimate of the return on real investment. This precision creates value by leading to better real investment decisions. Unlike agency costs of debt, whose magnitude can be expected to be small at low leverage levels, this information benefit of equity need not necessarily be small at low leverage levels. Therefore, an all-equity corner solution for optimal capital structure may reasonably arise. Such an outcome is most likely to occur for firms that are profitable, have many growth opportunities, or are relatively unique. The model provides valuable insight in the most important cases for which capital structure tradeoff theories have failed to predict corporate practice.
Author: H. Kent Baker
Publisher: John Wiley & Sons
ISBN: 0470569522
Category : Business & Economics
Languages : en
Pages : 516
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Book Description
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.
