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Author : Daniel Ghee Chong Yeoh
Publisher :
ISBN 13 :
Total Pages : 76 pages
Book Rating : 4.:/5 (224 download)
Download or read book Asset Sales by Financially Distressed Firms written by Daniel Ghee Chong Yeoh and published by . This book was released on 1995 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Brian Ayash
Publisher :
ISBN 13 :
Total Pages : 124 pages
Book Rating : 4.:/5 (94 download)
Download or read book Essays on Leveraged Buyouts and Distressed Asset Pricing written by Brian Ayash and published by . This book was released on 2014 with total page 124 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters that concern leveraged buyouts and the risk- return relationship of distressed stocks. The first chapter uses hand collected cash flow statements to present the origin, ownership and use of cash in leveraged buyouts of large publicly traded U.S. firms by private equity funds between 1980 and 2006. I find suggestive evidence that target firms exhibit inefficient investment in the form of empire building pre-acquisition. Once controlled by private equity funds, firms exhibit a significant decline in investment, sales and asset growth, and employment growth as debt is used to motivate managers and forces the release of excess free cash flows. I do not find evidence of value creation, as the profitability of the underlying assets does not increase under private equity control. There is evidence of an increase in cash flows from financial management expertise. This form of excess cash generation contributes to the funding of dividends but the majority of the funding is from asset sales and reduced investment prior to exit. Cash flow statements are also used to evaluate returns. I find that the IRR generated by underlying assets is insufficient to cover the cost of financing debt, adversely affecting the IRR to equity holders. The second chapter, co-authored with Harm Schu ̈tt, tests whether leveraged buyouts improve targets operating performance? We hand collect complete, comprehensive financial statements for a sample of 138 large public U.S. firms that were acquired by private equity funds in leveraged buyouts between 1980 and 2006, and we examine the operating performance of these companies. Because of our comparatively large dataset with comprehensive financial statements we can better scrutinize operating performance and the technical accounting issues associated with leveraged buyouts. We find that the acquired firms do not exhibit post-buyout improvements compared to industry peers. In addition to operations, we evaluate outcomes for the acquired firms. In an expanded sample of 531 large public to private leveraged buyouts we find that 109 (21%) subsequently declare bankruptcy or were restructured outside the bankruptcy court while held by private equity funds. Our results suggest that while private equity managers might be savvy investors, they are not better operators of the target companies. The third chapter explores the breakdown in the risk-return relationship of financially distressed stocks. I model firms in financial distress using an endogenous default model and demonstrate that distressed firms have nonsymmetric return distributions and are systematically mispriced under the CAPM. I propose the use of a CRRA utility model to correct for the mispricing of positive skewness in the return distribution of distressed stocks. I create portfolios using four distress measures and compare the risk-return relationship under both models. I find that the anomalously low return delivered by portfolios of the most distressed stocks is driven by the inclusion of OTC traded stocks.
Author : R. Glenn Hubbard
Publisher : University of Chicago Press
ISBN 13 : 0226355942
Total Pages : 354 pages
Book Rating : 4.2/5 (263 download)
Download or read book Asymmetric Information, Corporate Finance, and Investment written by R. Glenn Hubbard and published by University of Chicago Press. This book was released on 2009-05-15 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this volume, specialists from traditionally separate areas in economics and finance investigate issues at the conjunction of their fields. They argue that financial decisions of the firm can affect real economic activity—and this is true for enough firms and consumers to have significant aggregate economic effects. They demonstrate that important differences—asymmetries—in access to information between "borrowers" and "lenders" ("insiders" and "outsiders") in financial transactions affect investment decisions of firms and the organization of financial markets. The original research emphasizes the role of information problems in explaining empirically important links between internal finance and investment, as well as their role in accounting for observed variations in mechanisms for corporate control.
Author : Elroy Dimson
Publisher : CUP Archive
ISBN 13 : 9780521341042
Total Pages : 328 pages
Book Rating : 4.3/5 (41 download)
Download or read book Stock Market Anomalies written by Elroy Dimson and published by CUP Archive. This book was released on 1988-03-17 with total page 328 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Thomas J. Salerno
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)
Download or read book Acquisitions from Financially Distressed Companies written by Thomas J. Salerno and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: " ... offers six strategies for acquiring the assets of a distressed company, and then covers four main procedures for selling or purchasing assets through a bankruptcy proceeding. The publication also includes a handy chart detailing the differences between 363 sales and nonbankruptcy sales of a distressed company's assets"--Publisher's website
Author : William H. Beaver
Publisher : Now Publishers Inc
ISBN 13 : 1601984243
Total Pages : 89 pages
Book Rating : 4.6/5 (19 download)
Download or read book Financial Statement Analysis and the Prediction of Financial Distress written by William H. Beaver and published by Now Publishers Inc. This book was released on 2011 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Statement Analysis and the Prediction of Financial Distress discusses the evolution of three main streams within the financial distress prediction literature: the set of dependent and explanatory variables used, the statistical methods of estimation, and the modeling of financial distress. Section 1 discusses concepts of financial distress. Section 2 discusses theories regarding the use of financial ratios as predictors of financial distress. Section 3 contains a brief review of the literature. Section 4 discusses the use of market price-based models of financial distress. Section 5 develops the statistical methods for empirical estimation of the probability of financial distress. Section 6 discusses the major empirical findings with respect to prediction of financial distress. Section 7 briefly summarizes some of the more relevant literature with respect to bond ratings. Section 8 presents some suggestions for future research and Section 9 presents concluding remarks.
Author : Colin P. Mayer
Publisher : Oxford University Press
ISBN 13 : 0198815816
Total Pages : 425 pages
Book Rating : 4.1/5 (988 download)
Download or read book Finance and Investment written by Colin P. Mayer and published by Oxford University Press. This book was released on 2018 with total page 425 pages. Available in PDF, EPUB and Kindle. Book excerpt: Low growth, low investment, insufficient spend on infrastructure, weak bank lending to the corporate sector, and funding deficiencies of small and medium-sized enterprises are all causes of concern in Europe. To many, they point to fundamental problems in the financing of European companies and in Europe's financial systems. Are these concerns valid and do the structure and performance of the financial system lie at their heart? If so, what should be done to address them, and have the right policy prescriptions been identified to date? A product of the Restarting European Investment Finance research programme, Finance and Investment: The European Case brings together leading researchers to consider the causes of the persistently low level of investment in Europe. It examines the extent to which the financial system is a contributory factor and identifies possible remedies, considering the relation of finance to corporate sector investment, the lending behaviour of banks, the provision of equity financing, and the role of public sector institutions, regulation, and taxation. Finance and Investment provides one of the most comprehensive and thorough analyses of any financial system undertaken to date. It reflects a large body of research using new and existing data sets, employing advanced empirical tools, and exploiting the unique insights provided by the tumultuous events of financial and sovereign debt crises. Together, they comprise an exceptional body of knowledge to advance academic thinking and guide policy formulation.
Author : Colin Mayer
Publisher : Cambridge University Press
ISBN 13 : 9780521558532
Total Pages : 384 pages
Book Rating : 4.5/5 (585 download)
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.
Author : Claudia Curi
Publisher : Springer Nature
ISBN 13 : 3030495736
Total Pages : 84 pages
Book Rating : 4.0/5 (34 download)
Download or read book Asset Sales written by Claudia Curi and published by Springer Nature. This book was released on 2020-08-07 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a new world characterized by more frequent and rich flows of information, with more efficient and plenty of available external capital, how will the – simultaneous – investment and divestment decisions be affected? This book thoroughly covers the main features and relevance of asset sales as an integral component of many companies’ growth strategies in the current and continually evolving corporate finance eco-system. After an introductory section on the relevance of asset sales in corporations (both non-financial and financial), it discusses the corporate asset market and the mechanisms of asset sale transactions. The focus then turns to the theory of finance in asset sales (the efficiency and financing theory) and the extensive empirical literature now available. In light of recent and rapid technological and digital advances, a concluding section presents new perspectives on analyzing asset sales transactions. Chiefly intended as a primer for PhD students and academics, the book offers roadmaps for the empirical research landscape and suggests future research directions.
Author : Aswath Damodaran
Publisher : John Wiley & Sons
ISBN 13 : 0470049375
Total Pages : 698 pages
Book Rating : 4.4/5 (7 download)
Download or read book Damodaran on Valuation written by Aswath Damodaran and published by John Wiley & Sons. This book was released on 2016-02-08 with total page 698 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Aswath Damodaran is simply the best valuation teacher around. If you are interested in the theory or practice of valuation, you should have Damodaran on Valuation on your bookshelf. You can bet that I do." -- Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management and author of More Than You Know: Finding Financial Wisdom in Unconventional Places In order to be a successful CEO, corporate strategist, or analyst, understanding the valuation process is a necessity. The second edition of Damodaran on Valuation stands out as the most reliable book for answering many of today?s critical valuation questions. Completely revised and updated, this edition is the ideal book on valuation for CEOs and corporate strategists. You'll gain an understanding of the vitality of today?s valuation models and develop the acumen needed for the most complex and subtle valuation scenarios you will face.
Author : Robert K. Dixit
Publisher : Princeton University Press
ISBN 13 : 1400830176
Total Pages : 484 pages
Book Rating : 4.4/5 (8 download)
Download or read book Investment under Uncertainty written by Robert K. Dixit and published by Princeton University Press. This book was released on 2012-07-14 with total page 484 pages. Available in PDF, EPUB and Kindle. Book excerpt: How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.
Author : Stuart C. Gilson
Publisher : John Wiley & Sons
ISBN 13 : 0470503521
Total Pages : 852 pages
Book Rating : 4.4/5 (75 download)
Download or read book Creating Value Through Corporate Restructuring written by Stuart C. Gilson and published by John Wiley & Sons. This book was released on 2010-04-05 with total page 852 pages. Available in PDF, EPUB and Kindle. Book excerpt: An updated look at how corporate restructuring really works Stuart Gilson is one of the leading corporate restructuring experts in the United States, teaching thousands of students and consulting with numerous companies. Now, in the second edition of this bestselling book, Gilson returns to present new insight into corporate restructuring. Through real-world case studies that involve some of the most prominent restructurings of the last ten years, and highlighting the increased role of hedge funds in distressed investing, you'll develop a better sense of the restructuring process and how it can truly create value. In addition to "classic" buyout and structuring case studies, this second edition includes coverage of Delphi, General Motors, the Finova Group and Warren Buffett, Kmart and Sears, Adelphia Communications, Seagate Technology, Dupont-Conoco, and even the Eurotunnel debt restructuring. Covers corporate bankruptcy reorganization, debt workouts, "vulture" investing, equity spin-offs, asset divestitures, and much more Addresses the effect of employee layoffs and corporate downsizing Examines how companies allocate value and when a corporation should "pull the trigger" From hedge funds to financial fraud to subprime busts, this second edition offers a rare look at some of the most innovative and controversial restructurings ever.
Author : Aswath Damodaran
Publisher : John Wiley & Sons
ISBN 13 : 9780471414902
Total Pages : 1014 pages
Book Rating : 4.4/5 (149 download)
Download or read book Investment Valuation written by Aswath Damodaran and published by John Wiley & Sons. This book was released on 2002-01-31 with total page 1014 pages. Available in PDF, EPUB and Kindle. Book excerpt: Valuation is a topic that is extensively covered in business degree programs throughout the country. Damodaran's revisions to "Investment Valuation" are an addition to the needs of these programs.
Author : Stephen G. Moyer
Publisher : J. Ross Publishing
ISBN 13 : 1932159185
Total Pages : 518 pages
Book Rating : 4.9/5 (321 download)
Download or read book Distressed Debt Analysis written by Stephen G. Moyer and published by J. Ross Publishing. This book was released on 2004-11-15 with total page 518 pages. Available in PDF, EPUB and Kindle. Book excerpt: Providing theoretical and practical insight, this book presents a conceptual, but not overly technical, outline of the financial and bankruptcy law context in which restructurings take place. The author uses numerous real- world examples to demonstrate concepts and critical issues. Readers will understand the chess-like, multi- move strategies necessary to achieve financially advantageous results.
Author : Natalia Reisel
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (129 download)
Download or read book Asset Sales and Firm Value written by Natalia Reisel and published by . This book was released on 2014 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asset sales have been found to create significant abnormal returns of 0.5% - 1.5% on equity values. Several theories have been suggested to explain this result. Originally, the abnormal returns were attributed to efficient redistribution of assets. Later papers suggested that asset sales created value through an increase in focus or only when the proceeds were paid out due to agency costs. Asset sales may also create value from wealth transfers through asset substitution or due to the elimination of financial constraints and thus from an increase in financial flexibility for the selling firm. Theses theories all suggest that asset sales create equity value; however they have different implications for bond value. This paper examines 452 asset sales of at least $75 million from 1990 - 2004. We examine both the bond and equity abnormal returns. We find that asset sale generally create value for both debt and equity holders or neither, but we do not find evidence of wealth transfers. Firms with junk bonds, high leverage, low market-to-book, and low profitability all have significantly higher debt and equity returns from asset sales. We find that the primary determinant of excess bond value reactions is junk bond status and leverage. We find that the primary determinant of equity value excess return is junk bond status and relative transaction size. This evidence is consistent with firms that have financial constraints benefiting the most from asset sales. This suggest that a desire to increase financial flexibility may be a significant determinate of value creation from asset sales.
Author : Steven N. Kaplan
Publisher :
ISBN 13 :
Total Pages : 58 pages
Book Rating : 4.:/5 (129 download)
Download or read book How Costly is Financial (Not Economic) Distress? Evidence from Highly Leveraged Transactions that Became Distressed written by Steven N. Kaplan and published by . This book was released on 2000 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies thirty-one highly leveraged transactions (HLTs) of the 1980s that subsequently become financially distressed. At the time of distress, all sample firms have operating margins that are positive and in the majority of cases greater than the median for the industry. We argue that these firms, therefore, are financially distressed, not economically distressed. The net effect of the HLT and financial distress is a slight increase in value -- from the pre-transaction to distress resolution, the sample firms experience a marginally positive change in (market- or industry-adjusted) value. This finding strongly suggests that, overall, the HLTs of the late 1980s succeeded in creating value. We also present quantitative and qualitative estimates of the (direct and indirect) costs of financial distress and their determinants. Our preferred estimates of the costs of financial distress are 10% of firm value. Our most conservative estimates do not exceed 23% of firm value. Operating margins of the distressed firms increase immediately after the HLT, decline when the firms become distressed and while they are distressed, but then rebound after the distress is resolved. Consistent with some costs of financial distress, we find evidence of unexpected cuts in capital expenditures, undesired asset sales, and costly managerial delay in restructuring. To the extent they occur, the costs of financial distress that we identify are heavily concentrated in the period after the firms become distressed, but before they enter Chapter 11. We conclude the paper with an analysis of the determinants of the costs of financial distress.
Author : Gregor Andrade
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book How Costly is Financial (Not Economic) Distress? Evidence from Highly Leveraged Transactions that Became Distressed written by Gregor Andrade and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies twenty-nine highly leveraged transactions (HLTs) of the 1980s that subsequently become financially distressed. High leverage, not poor firm performance or poor industry performance, is the primary cause of financial distress for these firms -- all of the sample firms have positive operating income at the time of distress. These firms, therefore, are financially distressed, not economically distressed. We estimate the effects of this financial distress on value, the costs of financial distress, and their determinants. From pre-transaction to distress resolution, the sample firms experience a marginally positive change in (market- or industry-adjusted) value. The net effect of the HLT and distress, therefore, is to leave value slightly higher. Operating margins of the distressed firms increase immediately after the HLT, decline when the firms become distressed and while they are distressed, but then rebound after the distress is resolved. Consistent with some costs of financial distress, we find evidence of unexpected cuts in capital expenditures, undesired asset sales, and costly managerial delay in restructuring. Quantitative measures of the magnitude of the costs of financial distress, however, indicate that the costs are modest on average. To the extent they occur, the costs of financial distress that we identify are heavilyconcentrated in the period after the firms become distressed, but before they enter Chapter 11. We conclude the paper with an analysis of the determinants of the costs of financial distress. These costs are related to initial HLT capital, but are not related to the complexity of the firm's capital structure, to the time spent in distress or default, or to industry performance.
