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Capital Structure With Asymmetric Information About Value And Risk
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Book Synopsis Capital Structure with Asymmetric Information About Value and Risk by : Nikolay Halov
Download or read book Capital Structure with Asymmetric Information About Value and Risk written by Nikolay Halov and published by . This book was released on 2008 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper presents a simple model arguing that the pecking order theory is an extreme when there is only asymmetric information about value. We show how asymmetric information about both, value and risk, transforms the adverse selection logic underlying the pecking order into a general theory of capital structure that accounts for both debt and equity issues. The model predicts that firms issue more equity and less debt if there is more asymmetric information about risk relative to value. We find robust empirical support for the prediction and document a strong link between risk and capital structure in a large unbalanced panel of publicly traded US firms from 1971 to 2001.
Book Synopsis Corporate Finance Under Asymmetric Information by : Ejike Ezejiofor
Download or read book Corporate Finance Under Asymmetric Information written by Ejike Ezejiofor and published by GRIN Verlag. This book was released on 2014-11-18 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2014 in the subject Economics - Finance, , course: MBA and Engineering, language: English, abstract: The specter of decreased economic activities, financial crisis, unbecoming ethical standards have in the recent past and fore going, characterized asymmetric information on corporate finance. The consequences normally have a ricochet effect and can be generally catastrophic to normal economic activities to mention the least. This paper considers scenario’s where information asymmetry was prevalent or may have had its effects play out. The typical investor mindset and the opportunity cost associated with the preferred capital structure of the capitalizing process were mentioned. A basis for proper appreciation of the concept – Corporate finance under asymmetric information was initiated here, with a detailed explanation of corporate finance and its components, this was succeeded by a summary of scenarios were asymmetric information were prevalent and an intelligent look was also taken at asymmetric information between insiders and investors and the concomitant lemon problem, where the effects were carefully highlighted in a progression to the level of severity - Market breakdown and costly signaling. The fact that asymmetric information has been widely recognized as bad and generally viewed in a negative light must warrant it being viewed with a high level of seriousness. It is widely known that while lot of effort have been put into stemming the tides of the consequences of asymmetric information, a lot of effort too, have been dedicated to innovation and risk assessment, to capture the interest of investors, who have been affected by the consequences of asymmetric information. These may have formed a veritable platform for a recent paper by Pierre Barbaroux (2014), that elucidated the rise of innovation and innovative entrepreneurs based on the management of asymmetric information. An attempt has in any case, been made here to suggest efforts at marginalizing the negative impacts of asymmetric information and also remedies at reducing the far reaching impacts on the lenders and the aggregate economic activity in general.
Book Synopsis Capital Structure, Risk and Asymmetric Information by : M. V. Ibrahimo
Download or read book Capital Structure, Risk and Asymmetric Information written by M. V. Ibrahimo and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Capital Structure and Corporate Financing Decisions by : H. Kent Baker
Download or read book Capital Structure and Corporate Financing Decisions written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2011-05-03 with total page 516 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis A Theory of Capital Structure Under Moral Hazard and Asymmetric Information by : Yul Wha Lee
Download or read book A Theory of Capital Structure Under Moral Hazard and Asymmetric Information written by Yul Wha Lee and published by . This book was released on 1989 with total page 136 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Capital structure and assets risk by : Marco Botta
Download or read book Capital structure and assets risk written by Marco Botta and published by GRIN Verlag. This book was released on 2014-05-21 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: Doctoral Thesis / Dissertation from the year 2007 in the subject Economics - Finance, grade: NA, Catholic University of Sacred Heart, language: English, abstract: Using a sample of non-financial listed firms located in the Euro area, I investigate the determinants of capital structure choices. In line with the traditional theoretical approach, I use a market-value measure of leverage, estimated with the Black-Scholes-Merton model. In the cross-section regressions for firm leverage I find that some variables have similar effects across countries, while others may play a different role; risk, measured as the volatility of the market enterprise value, is the best predictor of observed leverage ratios. Risk, and asymmetric information about risk, make debt less attractive, because of higher expected bankruptcy costs, lower expected debt tax shield and higher agency costs. National environments are an important determinant of observed ratios; sector of activity is a relevant factor as well. The integration of Euro-area financial markets varies significantly depending on the market segment considered: money and inter-bank markets are highly integrated, corporate bond and equity markets show a clear path of increasing integration, retail banking markets are much less integrated. Fiscal and bankruptcy rules differ across the twelve countries; the economic background varies as well.
Book Synopsis developing country capital structures and emerging stock markets by : Aslı Demirgüç-Kunt
Download or read book developing country capital structures and emerging stock markets written by Aslı Demirgüç-Kunt and published by World Bank Publications. This book was released on 1992 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Are debt and equity finance complements or substitutes? Probably complements, which means that the existence of active stock markets should increase the volume of business for financial intermediaries.
Book Synopsis Corporate Policies In A World With Information Asymmetry by : Ramesh K S Rao
Download or read book Corporate Policies In A World With Information Asymmetry written by Ramesh K S Rao and published by World Scientific. This book was released on 2015-08-24 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt: A corporate manager typically oversees several ongoing projects and has the opportunity to invest in new projects that add wealth to the stockholders. Such new projects include expanding the corporation's existing business, entering into a new line of business, acquiring another business, and so on. If the firm does not have sufficient internal capital (cash) to finance the initial investment, the manager must enter into a transaction with outside investors to raise additional funds.In this situation, the manager of a public corporation faces two key decisions:Modern corporate finance theory, originating with the seminal work of Merton Miller and Franco Modigliani, has demonstrated that these decisions depend on the information that the manager and investors have about the firm's future cash flows.In this book, the authors examine these decisions by assuming that the manager has private information about the firm's future cash flows. They provide a unified framework that yields new theoretical insights and explains many empirical anomalies documented in the literature.
Book Synopsis Essays on Financial Markets with Asymmetric Information by : Robert Lee Heinkel
Download or read book Essays on Financial Markets with Asymmetric Information written by Robert Lee Heinkel and published by . This book was released on 1978 with total page 362 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Bank Funding Structures and Risk by : Mr.Francisco F. Vazquez
Download or read book Bank Funding Structures and Risk written by Mr.Francisco F. Vazquez and published by International Monetary Fund. This book was released on 2012-01-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the evolution of bank funding structures in the run up to the global financial crisis and studies the implications for financial stability, exploiting a bank-level dataset that covers about 11,000 banks in the U.S. and Europe during 2001?09. The results show that banks with weaker structural liquidity and higher leverage in the pre-crisis period were more likely to fail afterward. The likelihood of bank failure also increases with bank risk-taking. In the cross-section, the smaller domestically-oriented banks were relatively more vulnerable to liquidity risk, while the large cross-border banks were more susceptible to solvency risk due to excessive leverage. The results support the proposed Basel III regulations on structural liquidity and leverage, but suggest that emphasis should be placed on the latter, particularly for the systemically-important institutions. Macroeconomic and monetary conditions are also shown to be related with the likelihood of bank failure, providing a case for the introduction of a macro-prudential approach to banking regulation.
Book Synopsis Asymmetric Information in Financial Markets by : Ricardo N. Bebczuk
Download or read book Asymmetric Information in Financial Markets written by Ricardo N. Bebczuk and published by Cambridge University Press. This book was released on 2003-08-21 with total page 176 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric information (the fact that borrowers have better information than their lenders) and its theoretical and practical evidence now forms part of the basic tool kit of every financial economist. It is a phenomenon that has major implications for a number of economic and financial issues ranging from both micro and macroeconomic level - corporate debt, investment and dividend policies, the depth and duration of business cycles, the rate of long term economic growth - to the origin of financial and international crises. Asymmetric Information in Financial Markets aims to explain this concept in an accessible way, without jargon and by reducing mathematical complexity. Using elementary algebra and statistics, graphs, and convincing real-world evidence, the author explores the foundations of the problems posed by asymmetries of information in a refreshingly accessible and intuitive way.
Book Synopsis Lessons in Corporate Finance by : Paul Asquith
Download or read book Lessons in Corporate Finance written by Paul Asquith and published by John Wiley & Sons. This book was released on 2016-03-28 with total page 499 pages. Available in PDF, EPUB and Kindle. Book excerpt: A discussion-based learning approach to corporate finance fundamentals Lessons in Corporate Finance explains the fundamentals of the field in an intuitive way, using a unique Socratic question and answer approach. Written by award-winning professors at M.I.T. and Tufts, this book draws on years of research and teaching to deliver a truly interactive learning experience. Each case study is designed to facilitate class discussion, based on a series of increasingly detailed questions and answers that reinforce conceptual insights with numerical examples. Complete coverage of all areas of corporate finance includes capital structure and financing needs along with project and company valuation, with specific guidance on vital topics such as ratios and pro formas, dividends, debt maturity, asymmetric information, and more. Corporate finance is a complex field composed of a broad variety of sub-disciplines, each involving a specific skill set and nuanced body of knowledge. This text is designed to give you an intuitive understanding of the fundamentals to provide a solid foundation for more advanced study. Identify sources of funding and corporate capital structure Learn how managers increase the firm's value to shareholders Understand the tools and analysis methods used for allocation Explore the five methods of valuation with free cash flow to firm and equity Navigating the intricate operations of corporate finance requires a deep and instinctual understanding of the broad concepts and practical methods used every day. Interactive, discussion-based learning forces you to go beyond memorization and actually apply what you know, simultaneously developing your knowledge, skills, and instincts. Lessons in Corporate Finance provides a unique opportunity to go beyond traditional textbook study and gain skills that are useful in the field.
Book Synopsis Asymmetric Information and the Market Structure of the Banking Industry by : Mr.Giovanni Dell'Ariccia
Download or read book Asymmetric Information and the Market Structure of the Banking Industry written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 1998-06-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes the effects of informational asymmetries on the market structure of the banking industry in a multi-period model of spatial competition. All lenders face uncertainty with regard to borrowers’ creditworthiness, but, in the process of lending, incumbent banks gather proprietary information about their clients, acquiring an advantage over potential entrants. These informational asymmetries are an important determinant of the industry structure and may represent a barrier to entry for new banks. The paper shows that, in contrast with traditional models of horizontal differentiation, the steady-state equilibrium is characterized by a finite number of banks even in the absence of fixed costs.
Book Synopsis Asymmetric Information in Financial Markets by : Ricardo N. Bebczuk
Download or read book Asymmetric Information in Financial Markets written by Ricardo N. Bebczuk and published by Cambridge University Press. This book was released on 2003-08-21 with total page 170 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asymmetric information (the fact that borrowers have better information than their lenders) and its theoretical and practical evidence now forms part of the basic tool kit of every financial economist. It is a phenomenon that has major implications for a number of economic and financial issues ranging from both micro and macroeconomic level - corporate debt, investment and dividend policies, the depth and duration of business cycles, the rate of long term economic growth - to the origin of financial and international crises. Asymmetric Information in Financial Markets aims to explain this concept in an accessible way, without jargon and by reducing mathematical complexity. Using elementary algebra and statistics, graphs, and convincing real-world evidence, the author explores the foundations of the problems posed by asymmetries of information in a refreshingly accessible and intuitive way.
Book Synopsis Asymmetric Information, Corporate Finance, and Investment by : R. Glenn Hubbard
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.
Book Synopsis The Debt/equity Choice by : Ronald W. Masulis
Download or read book The Debt/equity Choice written by Ronald W. Masulis and published by . This book was released on 1988 with total page 168 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Theoretical and Empirical Issues in Capital Structure by : John Krzysztof Wald
Download or read book Theoretical and Empirical Issues in Capital Structure written by John Krzysztof Wald and published by . This book was released on 1996 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:
