Solving The Multi Period Agency Problem And Design Of Corporate Securities
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Author | : Ren-Raw Chen |
Publisher | : |
Total Pages | : 35 |
Release | : 2010 |
Genre | : |
ISBN | : |
This paper identifies and solves the multi-period agency problem. Overcoming the major weakness of traditional agency theory in a one period world, we adopt a multi-period option method to show adverse incentive problems with debt solving for the actual agency cost using compound options. It does not require asymmetric information as exists with current agency models. We find that firms can have debts greater than their asset value and continue to operate as long as current payments are being met. This situation creates an incentive for them to sell off their best assets that increases the risk of their remaining business and reduces survival. A major result of this model is to show why sinking funds actually increase a firm's agency costs explaining the demise of the traditional sinking fund over the last twenty years.
Author | : G. Constantinides |
Publisher | : Elsevier |
Total Pages | : 698 |
Release | : 2003-11-04 |
Genre | : Business & Economics |
ISBN | : 9780444513632 |
Arbitrage, State Prices and Portfolio Theory / Philip h. Dybvig and Stephen a. Ross / - Intertemporal Asset Pricing Theory / Darrell Duffle / - Tests of Multifactor Pricing Models, Volatility Bounds and Portfolio Performance / Wayne E. Ferson / - Consumption-Based Asset Pricing / John y Campbell / - The Equity Premium in Retrospect / Rainish Mehra and Edward c. Prescott / - Anomalies and Market Efficiency / William Schwert / - Are Financial Assets Priced Locally or Globally? / G. Andrew Karolyi and Rene M. Stuli / - Microstructure and Asset Pricing / David Easley and Maureen O'hara / - A Survey of Behavioral Finance / Nicholas Barberis and Richard Thaler / - Derivatives / Robert E. Whaley / - Fixed-Income Pricing / Qiang Dai and Kenneth J. Singleton.
Author | : Manish Tewari |
Publisher | : |
Total Pages | : 92 |
Release | : 2008 |
Genre | : Derivative securities |
ISBN | : |
This study focuses on the role of structured derivative securities to meet diverse corporate financing objectives in the light of agency theory and asymmetric information. The focus is on the nonconvertible callable-puttable fixed-coupon bonds. The primary objective is to discern the marginal role of the put and put-deferred features in addressing the agency issues and asymmetric information. A sample of (159) securities issued over the period (1977-2005) are examined using Merton's (1974) structural contingent claims valuation model. The put option as well as the deferred put option incorporated in these securities is found to mitigate the asset substitution issue. It is also found that these contract features provide considerable insurance against the asymmetric information about the firm's downside risk. Specifically, the effects of asset substitution are mitigated because the put option reduces sensitivity of the security's value to the changes in the firm's volatility. Prior to this study, this effect was believed to be driven primarily by the conversion feature in the convertible bonds and the preferred stocks. In addition, the long-term performance of the underlying common stock indicates systematic negative performance for the protracted periods both prior and subsequent to the issuance, yet it is found that this decline in the equity value has only a limited negative impact on the security.
Author | : H. Osano |
Publisher | : Springer |
Total Pages | : 310 |
Release | : 2001-11-06 |
Genre | : Business & Economics |
ISBN | : 0230288146 |
Banking, Capital Markets and Corporate Governance explores the fragility of the banking system, corporate governance, and the increasing securitization of corporate finance. The contributors address the following issues. The impact of banking during a crisis in providing an incentive for the managers of failing banks to restructure their assets; the way in which economic and legal institutions can control the management of banks and firms; and the effects of increases in the securitization of corporate finance and the amount of financial innovation.
Author | : Hersh Shefrin |
Publisher | : |
Total Pages | : 712 |
Release | : 2001 |
Genre | : Investments |
ISBN | : |
Author | : |
Publisher | : University of Belgrade, Faculty of Organizational Sciences |
Total Pages | : 2004 |
Release | : 2012-06-03 |
Genre | : Business & Economics |
ISBN | : 8676802556 |
Author | : Eli Cohen. |
Publisher | : Informing Science |
Total Pages | : 445 |
Release | : |
Genre | : Business & Economics |
ISBN | : 1932886036 |
Research papers on Collaborative Work / Working Together / Teams, Control, Audit, and Security, Curriculum Issues, Decision Making / Business Intelligence (DM/BI), Distance Education & e-Learning, Doctoral Studies, Economic Aspects, Education / Training, Educational Assessment & Evaluation, Ethical, and Social, & Cultural Issues
Author | : Lee, In |
Publisher | : IGI Global |
Total Pages | : 2838 |
Release | : 2008-12-31 |
Genre | : Computers |
ISBN | : 1605660574 |
Enhances libraries worldwide through top research compilations from over 250 international authors in the field of e-business.
Author | : Information Resources Management Association. International Conference |
Publisher | : IGI Global |
Total Pages | : 978 |
Release | : 1998-01-01 |
Genre | : Business & Economics |
ISBN | : 9781878289506 |
Technological advances of the past decades have allowed organizations of all sizes to use information technology in all aspects of organizational management. This book presents more than 200 papers that address this growing corporate phenomena.
Author | : Roger Lee |
Publisher | : Springer Nature |
Total Pages | : 200 |
Release | : |
Genre | : |
ISBN | : 3031533852 |