Do Agency Costs Matter For Optimal Capital Structure
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Author | : Anjan V. Thakor |
Publisher | : |
Total Pages | : 46 |
Release | : 2009 |
Genre | : |
ISBN | : |
I show that agency costs are irrelevant in determining optimal capital structure, in the sense that variations in capital structure induced by agency costs have no impact on firm value, if all agents have common and rational prior beliefs about future states of the world, project-choice control can be costlessly allocated to any party in each state, and there are no taxes. This conclusion is robust to assuming that only the manager can have project-choice control or that the only outsiders with project-choice control are the bondholders or that states are unobservable to any party that does not have project choice control. However, when the common-prior-beliefs assumption is dropped and the model is extended to allow equally-informed agents to disagree over firm value, a link emerges between capital structure and firm value even if allocating state-contingent project-choice control to any party is costless.
Author | : Sukho Sonu |
Publisher | : |
Total Pages | : 212 |
Release | : 1989 |
Genre | : |
ISBN | : |
Author | : Aswath Damodaran |
Publisher | : FT Press |
Total Pages | : 604 |
Release | : 2009-06-19 |
Genre | : Business & Economics |
ISBN | : 0137036558 |
Renowned valuation expert Aswath Damodaran reviews the core tools of valuation, examines today’s most difficult estimation questions and issues, and then systematically addresses the valuation challenges that arise throughout a firm’s lifecycle in The Dark Side of Valuation: Valuing Young, Distressed and Complex Businesses. In this thoroughly revised edition, he broadens his perspective to consider all companies that resist easy valuation, highlighting specific types of hard-to-value firms, including commodity firms, cyclical companies, financial services firms, organizations dependent on intangible assets, and global firms operating diverse businesses. He covers the entire corporate lifecycle, from “idea” and “nascent growth” companies to those in decline and distress, and offers specific guidance for valuing technology, human capital, commodity, and cyclical firms. ·
Author | : Antonio Mello |
Publisher | : Forgotten Books |
Total Pages | : 40 |
Release | : 2018-02-25 |
Genre | : Business & Economics |
ISBN | : 9780666358035 |
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.
Author | : Hayne E. Leland |
Publisher | : |
Total Pages | : 45 |
Release | : 1998 |
Genre | : Capital investments |
ISBN | : |
Author | : Lorenz Cuturi |
Publisher | : |
Total Pages | : |
Release | : 2010 |
Genre | : |
ISBN | : |
Author | : Oded Sarig |
Publisher | : |
Total Pages | : 170 |
Release | : 1983 |
Genre | : |
ISBN | : |
Author | : Christopher Parsons |
Publisher | : Now Publishers Inc |
Total Pages | : 107 |
Release | : 2009 |
Genre | : Business & Economics |
ISBN | : 160198202X |
Empirical Capital Structure reviews the empirical capital structure literature from both the cross-sectional determinants of capital structure as well as time-series changes.
Author | : Andrei Shleifer |
Publisher | : OUP Oxford |
Total Pages | : 295 |
Release | : 2000-03-09 |
Genre | : Business & Economics |
ISBN | : 0191606898 |
The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets.
Author | : Raghavendra Rau |
Publisher | : Cambridge University Press |
Total Pages | : 196 |
Release | : 2017-01-11 |
Genre | : Business & Economics |
ISBN | : 1316984117 |
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.