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Author : Manar Elgazzar
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Essays on Corporate Debt Financing Decisions written by Manar Elgazzar and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : S. M. Zahid
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.3/5 (83 download)
Download or read book Essays on Corporate Financing Decisions written by S. M. Zahid and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores firms' asset structure from different dimensions and investigates their impact of corporate financing decisions. In the first chapter of the dissertation, my coauthor and I investigate the impact of redeployability of long-term assets on corporate cash holdings. We find that firms with redeployable assets hold significantly less cash. To address the endogeneity concerns, we implement propensity score matching and entropy balancing. Our results to robust to this matching and balancing analysis. To address causality, we exploit the Russian Crisis of 1998 and find evidence of a causal effect of asset redeployability on corporate cash holdings. We also investigate the underlying mechanisms driving the relationship between asset redeployability and cash holdings. First, we find evidence that redeployability positively affects an asset's potential to be great collateral for acquiring external financing. To support the external financing argument, we find that firms with more redeployable assets have greater access to credit line facilities. Second, we find that asset redeployabilty gives firms an edge to sell corporate assets in the secondary market. This effect is more pronounced during industry downturns. Collectively, the evidence points to an important interplay between the liquidity of the short-term portion of the balance sheet and the long-term portion of the balance sheet.In the second chapter my co-author and I investigate the influence of intangible assets on corporate debt structure. We find that firms with intangible capital issue debt with shorter maturity and prefer unsecure debt over secure debt. To address the endogeneity concerns, we implement propensity score matching and entropy balancing. To find causal evidence, we implement an instrumental variable approach. We also investigate the underlying mechanisms through which intangible capital influence corporate debt structure. We find that agency conflict and information asymmetry as underlying mechanisms explaining the relationship between intangible capital and the maturity structure of corporate debt. We also find that demand for financial flexibility explain the relationship between intangible capital and unsecured debt. Overall, the evidence points to the impact of intangible capital in explaining the change in corporate debt structure in the last four decades.
Author : Shage Zhang
Publisher :
ISBN 13 :
Total Pages : 200 pages
Book Rating : 4.:/5 (881 download)
Download or read book Three Essays in Empirical Corporate Finance written by Shage Zhang and published by . This book was released on 2012 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Mahsa Somayeh Kaviani
Publisher :
ISBN 13 :
Total Pages : 167 pages
Book Rating : 4.:/5 (111 download)
Download or read book Three Essays on Corporate Debt Financing written by Mahsa Somayeh Kaviani and published by . This book was released on 2016 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first of three essays, we study the relationship between corporate debt structures and the strength of creditor rights. Firms use a more concentrated debt-type structure as a reaction mechanism to stronger creditor rights. We show that managers form more concentrated debt structures in response to stronger creditor rights in order to first, reduce bankruptcy costs and second, to provide more monitoring incentives for creditors. Across 46 countries, we document that firms have more concentrated debt-type structures in countries with stronger creditor rights. Based on an examination of the cross-sectional heterogeneity of firms to different creditor rights regimes, we confirm our two proposed mechanisms. This study extends the literature of debt structure to an international setting and is the first to document the effect of cross-country legal and institutional determinants on the choice of debt structures. In the second essay, we investigate how uncertainty about economic policies influence corporate credit spreads. We find a large and positive association between corporate credit spreads and a news-based index of policy uncertainty. We document that a one standard deviation increase in policy uncertainty results in 25 basis points increase in the credit spreads of corporate bonds controlling for bond, firm and macro-economic variables. We find that the influence of policy uncertainty on corporate credit spreads differs across firms and is more pronounced for firms with higher investment irreversibility and dependence on government spending. We also document a larger impact of policy uncertainty during economic recessions. Our results show that not only firm-level default probabilities, but also bond-CDS bases increase in response to elevated policy uncertainty. The third and final essay empirically measures the financial and economic costs (benefits) to firm value associated with deteriorations or improvements in the firm’s credit quality. We document that firms incur economically large and statistically significant costs to their values following credit-rating deteriorations. Consistent with an asymmetric effect, we find significant but smaller firm-value benefits associated with credit-rating upgrades. The financial costs to a firm’s market value associated with each notch downgrade to the investment and speculative grade categories are 7.1% and 14.8%, respectively, and these costs are generally larger than the economic costs to the firm value from credit rating downgrades. Using a continuous KMV distance to default model, we conclude that deteriorations (improvements) in a model-generated credit rating quality can also adversely (positively) affect firm value. Our findings have implications for corporate financing and leverage decisions, and for the unresolved underleverage puzzle (Graham, 2001).
Author : Hoang Van Vu
Publisher :
ISBN 13 :
Total Pages : 310 pages
Book Rating : 4.:/5 (11 download)
Download or read book Essays in Corporate Financing and Investment Decisions written by Hoang Van Vu and published by . This book was released on 2015 with total page 310 pages. Available in PDF, EPUB and Kindle. Book excerpt: The evolution of corporate debt markets in recent decades, especially short-term debt facilities and bank debt, has made funding more accessible for corporate borrowers. On the other hand, the changing environment of debt markets also creates new challenges for corporate borrowers. First, as the debt maturity structure has become shorter, companies face higher liquidity pressure. Second, since banks also increasingly rely on short-term wholesale funding, the maturity mismatch of bank assets and liabilities has widened, further increasing economy-wide liquidity risk. These problems were illustrated by the most recent liquidity crisis that lasted from 2007 to 2009. Understanding the implications of borrowing using short-term debt therefore is crucial for the modern corporate finance. Moreover, the issues regarding the maturity mismatch of the banking sector imply that fluctuations in bank credit might increase, as banks become more sensitive to liquidity constraints. This thesis explores a number of issues regarding the use of short-term debt by non-financial companies, as well as the implications of fluctuations in bank credit for corporate financial and investment policies. The thesis contains three empirical research essays, presented individually in Chapters 2, 3 and 4. The first essay investigates the implications of debt maturity structure on corporate investment activities in the presence of firm specific default risk. The second and the third essays examine the implications of bank credit cycles on corporate activities. Essay 2 studies the effect of bank credit cycles on firms' choice of external financing issues, whereas Essay 3 examines the effect of bank credit on corporate liquidity management policies and the spending on different types of investment.
Author : İrem Demirci
Publisher :
ISBN 13 :
Total Pages : 200 pages
Book Rating : 4.:/5 (857 download)
Download or read book Essays on Business Relations and Corporate Finance written by İrem Demirci and published by . This book was released on 2013 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation studies the impact of business relations on firms' financing decisions. The goal is to understand the determinants of business relations and how they interact with firms' capital structure. In the first chapter, I present a model which studies the role of customer risk in suppliers' financing choice. The base model predicts that when faced with a high-risk customer, suppliers with significant continuation values prefer equity over debt. The extended model allows for analyzing the supplier's decision to concentrate on a single major customer or diversify into multiple customers. The model shows that by decreasing the risk of premature liquidation, diversification allows for the supplier to take advantage of the bargaining benefits of debt. The second chapter empirically investigates the impact of customer risk on suppliers' capital structure. Consistent with the model presented in the first chapter, both cross-sectional and time-series regression results show that customer risk has a negative impact on suppliers' debt financing. Customer risk is an important determinant of suppliers' method of financing as well. During the first two years of the relationship, suppliers with high-risk customers are more likely to raise equity. Comparing the impact of customer risk on different supplier groups shows that firms that operate in concentrated industries and younger firms are more sensitive to changes in customer risk. In further analyses I find that the risk is transferred from customers to suppliers: There is a lead-lag relationship between customer and supplier credit rating changes. Also, suppliers experience an increase in volatility of their stock returns after they start a new relationship with a risky customer. Results from further analyses are suggestive of customer risk affecting capital structure through its impact on supplier risk.
Author : R. Matthew Darst
Publisher :
ISBN 13 : 9781321982442
Total Pages : 205 pages
Book Rating : 4.9/5 (824 download)
Download or read book Essays on Credit Default Swaps and Corporate Debt Financing Decisions written by R. Matthew Darst and published by . This book was released on 2015 with total page 205 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract : The chapters of this dissertation examine the influence credit default swaps (CDS) have a number of different corporate debt financing outcomes. Chapter Two studies the effects CDS have on firm financing in a general equilibrium production economy with heterogeneous firms. Covered CDS lower borrowing costs for all firms even when CDS contracts are traded on only one firm type. This leads to higher investment levels in the economy, but raises the likelihood of default when productivity shocks are bad. Naked CDS raise borrowing costs for all firms even when CDS contracts trade on a single firm type. This lowers investment levels in the economy, and lowers the likelihood of default. Lastly, we show that both Covered and Naked CDS induce borrowing cost spillovers to all firm types even when CDS do not exist for all firm types.Chapter Three investigates the effects that CDS have on the term-structure of corporate bonds. I find that covered CDS tend to lengthen average debt maturity which is consistent with recent empirical work. Covered CDS lower borrowing costs, the benefits of which become consolidated at the time of issuance when the firm issues long term debt rather than a sequence of short term bonds, which exposes the firm to bond price updating. Additionally, naked CDS may shorten average debt maturity and create “maturity mis-match” in corporate debt markets. Naked CDS raise borrowing costs which also become consolidated at the time of issuance when firms issue long term debt rather than short term bonds, and incentivizes the firm to issue risky short term debt. Furthermore, naked CDS may destroy equilibrium whenever firms issue short term debt.Chapter Four tests whether trading in CDS markets lead to borrowing cost spillovers across firms that are not named reference entities in CDS transactions. General equilibrium models of firm financing with CDS suggest that collateralized CDS contracts may reallocate capital away from bond markets and into derivative markets. We find evidence, conditional on firm rating, that the introduction of CDS affects the cost of issuing bonds for firms who are not single-named CDS reference entities. Borrowing costs for investment-grade firms increase, whereas borrowing costs for high-yield firms decrease when CDS are introduced for equivalently rated firms. We attribute the difference in borrowing costs across ratings classes due to differences in how CDS affect the liquidity of investment-grade versus high-yield corporate bonds. Various robustness checks are conducted for the endogeneity of both CDS introduction and bond issuance.
Author : Yoonsoo Nam
Publisher :
ISBN 13 :
Total Pages : 140 pages
Book Rating : 4.5/5 (381 download)
Download or read book Essays on Corporate Financing Decisions written by Yoonsoo Nam and published by . This book was released on 2021 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: For the first chapter of this dissertation, I exploit the staggered enactment of U.S. state-level laws protecting outside directors from shareholder lawsuits. Following the laws' enactment, leverage ratios increase. This finding is consistent with a channel in which firms raise debt as a managerial control mechanism to counterbalance increased director protection. The documented relation is significant for firms where the control function of debt is more important, in which shareholders and takeover market participants are likely to influence managerial decisions, and that are unlikely to be constrained in financial markets. Firms increasing leverage raise dividends, decrease cash holdings, and offset the value loss stemming from reduced monitoring. For the second chapter, my coauthors and I find that product market threats measured by market fluidity increase lease financing, which is consistent with the channel that leasing tangible assets enables firms to increase their net worth when facing adverse cash flow shocks. We address endogeneity by adopting import tariff rates as an instrumental variable and additionally employing instrumented Chinese import penetration ratio as an alternate measure of product market threats. We further show that our documented positive relation between product market threats and leases is more significant for the subsamples of firms that are less financially flexible, that have lower operational flexibility, and that face lower tax rates. In further analyses, we find that firms raising leases in response to increased product market threats grow faster, which offsets profitability erosion stemming from heightened product market threats. These firms also increase leverage, a finding that complements theoretical predictions in recent literature.
Author : Priit Sander
Publisher :
ISBN 13 : 9789949117659
Total Pages : 178 pages
Book Rating : 4.1/5 (176 download)
Download or read book Essays on Factors Influencing Financing Decisions of Companies written by Priit Sander and published by . This book was released on 2007 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Matteo P. Arena
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (123 download)
Download or read book Three Essays on the Corporate Debt Choice written by Matteo P. Arena and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the determinants of the corporate debt choice between different forms of debt financing and different countries. By examining the most extensive sample of U.S. debt issues to date, Essay 1 shows that firms that issue 144A debt are significantly different from firms that privately place non-bank debt without using the 144A rule. I also find that traditional private placements rather than bank loans are the favorite debt source for firms with good credit quality that cannot access the public market because of flotation costs and information asymmetry. Essay 2 examines how governance provisions that affect the cost of debt are related to the corporate debt choice. I find that firms with fewer takeover defenses and larger blockholder ownership are more likely to issue private debt. This result is consistent with the hypothesis that private debt claimants can reduce the expected negative impact of takeovers on debtholder value by enforcing stricter covenants or by renegotiating debt in case of takeover. Essay 3 examines the external debt financing choices of multinational firms by using a unique international dataset of firm-level debt offerings. I show that tax-based incentives, country-specific investor preferences, and difference in legal regimes across countries influence multinational firms in their debt location choice.
Author : Pavel Zryumov
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (911 download)
Download or read book Essays in Corporate Finance written by Pavel Zryumov and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis studies the investment and financing decisions of firms in dynamic markets with asymmetric information. In the first chapter I analyze the effects of time-varying market conditions and endogenous entry on the equilibrium dynamics of markets plagued by adverse selection. I show that variation in gains from trade, stemming from market conditions, creates an option value and distorts liquidity when gains from trade are low. An improvement in market conditions triggers a wave of high-quality deals due to the preceding illiquidity and lack of incentives to signal quality. When gains from trade are high, the market is fully liquid; high prices and no delay in trade attract low-grade assets, and the average quality deteriorates. My analysis also reveals that illiquidity can act as a remedy as well as a cause of inefficiency: partial illiquidity allows for screening of assets and restores efficient entry incentives. I demonstrate model implications using several applications: early stage financing, initial public offerings, and private equity buyouts. Chapter 2, which is a joint work with Ilya Strebulaev and Haoxiang Zhu, reexamines the classic yet static information asymmetry model of Myers and Majluf (1984) in a fully dynamic market. A firm has access to an investment project and can finance it by debt or equity. The market learns the quality of the firm over time by observing cash flows generated by the firm's assets in place. In the dynamic equilibrium, the firm optimally delays investment, but investment eventually takes place. In a ``two-threshold'' equilibrium, a high-quality firm invests only if the market's belief goes above an optimal upper threshold, while a low-quality firm invests if the market's belief goes above the upper threshold or below a lower threshold. However, a different ``four-threshold'' equilibrium can emerge if cash flows are sufficiently volatile. Relatively risky growth options are optimally financed with equity, whereas relatively safe projects are financed with debt, in line with stylized facts. Finally, Chapter 3, which is based on an ongoing work with Ilya Strebulaev and Haoxiang Zhu, extends the analysis of Chapter 2 by allowing cash accumulation within the firm. We consider a firm whose managers possess superior information about the firm's value relative to the rest of the market and analyze the optimal timing of equity issuance. We show that equilibrium features socially inefficient, but privately optimal, delay of investment and equity financing of positive NPV projects. Waiting allows high quality firms to accumulate internal cash and increase investors' beliefs, therefore, reducing the cost of adverse selection. In the dynamic equilibrium low quality firms delay investment as well in hope of being mistaken for the high quality ones. However, when market beliefs are sufficiently low and/or internally accumulated level of cash is sufficiently high the low quality firm prefers to reveal itself.
Download or read book Three Essays in Dynamic Corporate Finance written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The three essays constituting this thesis focus on financing and cash management policy. The first essay aims to shed light on why firms issue debt so conservatively. In particular, it examines the effects of shareholder and creditor protection on capital structure choices. It starts by building a contingent claims model where financing policy results from a trade-off between tax benefits, contracting costs and agency costs. In this setup, controlling shareholders can divert part of the firms' cash ows as private benefits at the expense of minority share- holders. In addition, shareholders as a class can behave strategically at the time of default leading to deviations from the absolute priority rule. The analysis demonstrates that investor protection is a first order determinant of firms' financing choices and that conflicts of interests between firm claimholders may help explain the level and cross-sectional variation of observed leverage ratios. The second essay focuses on the practical relevance of agency conflicts. De- spite the theoretical development of the literature on agency conflicts and firm policy choices, the magnitude of manager-shareholder conflicts is still an open question. This essay proposes a methodology for quantifying these agency conflicts. To do so, it examines the impact of managerial entrenchment on corporate financing decisions. It builds a dynamic contingent claims model in which managers do not act in the best interest of shareholders, but rather pursue private benefits at the expense of shareholders. Managers have discretion over financing and dividend policies. However, shareholders can remove the manager at a cost. The analysis demonstrates that entrenched managers restructure less frequently and issue less debt than optimal for shareholders. I take the model to the data and use observed financing choices to provide firm-specific estimates of the degree of managerial entrenchment. Using structural econometrics, I find costs of contro.
Author : Tijana Rajkovic
Publisher :
ISBN 13 :
Total Pages : 169 pages
Book Rating : 4.:/5 (958 download)
Download or read book Three Essays on Inside Debt written by Tijana Rajkovic and published by . This book was released on 2015 with total page 169 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is composed of three essays examining inside debt. The first essay tests the impact of inside debt on security issuance decisions. I find that CEOs with high debt incentives are more likely to issue equity that debt, unlever firm capital structure, and hold debt of longer average maturity. The results indicate that managers with high debt incentives favor financing decisions that decrease firm risk. The second essay examines the determinants of use and magnitude of inside debt. I find a positive association between inside debt and CEO talent. In addition, I find that inside debt affects the likelihood of CEO post-retirement board service and CEO successor characteristics. The third essay examines the impact of inside debt on corporate dividend policy. I find that companies with large CEO holdings of inside debt are more likely to pay and increase dividends, and have larger dividend payouts. The results indicate that inside debt, by reducing firm risk, positively influences corporate dividend policy.
Author : Rita Biswas
Publisher : Emerald Group Publishing
ISBN 13 : 178973391X
Total Pages : 190 pages
Book Rating : 4.7/5 (897 download)
Download or read book Essays in Financial Economics written by Rita Biswas and published by Emerald Group Publishing. This book was released on 2019-10-24 with total page 190 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume, dedicated to John W. Kensinger, explores a variety of topics in financial economics, including firm growth, investment risks, and the profitability of the banking industry. With its global perspective, Essays in Financial Economics is a valuable addition to the bookshelf of any researcher in finance.
Author : Joon Ho Kim
Publisher :
ISBN 13 :
Total Pages : 92 pages
Book Rating : 4.:/5 (878 download)
Download or read book Two Essays on Corporate Finance written by Joon Ho Kim and published by . This book was released on 2013 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: My dissertation focuses on the effect of financial market frictions on firm value in the context of corporate mergers, capital structure and growth. The first chapter explores how financing frictions faced by potential buyers of industry specific real assets affect the transaction value of merger targets that consist of such assets. I find that shareholders of target firms with highly specialized assets receive a significantly smaller premium than targets with generic assets when industry peer firms are financially constrained. Further investigation reveals that firms with specialized assets reduce leverage more than other firms when the risk of liquidation loss is high. The second chapter explores how frictions in the financial market affect corporate capital structure and growth. I present evidence that firms that have experienced financing frictions prior to entering the public debt market undergo significant changes in capital structure and investment as they gain access to the new sources of capital. Overall, the findings in this dissertation highlight the importance of financing frictions as key determinants of capital structure and firm value.
Download or read book Essays on Financing Decisions, Redemption Features and the Joint Capital Structure/debt Maturity Decision written by and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Huan Yang
Publisher :
ISBN 13 :
Total Pages : 300 pages
Book Rating : 4.:/5 (1 download)
Download or read book Essays on Corporate Investment and Payout Policies written by Huan Yang and published by . This book was released on 2017 with total page 300 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation comprises two independent essays that examine how the shareholder-creditor conflicts affect corporate investment, and how the enhanced labor power influences corporate payout policies. In the first chapter, I analyze the impact of shareholder-creditor conflicts on corporate risk-taking. In particular, I examine the role played by institutional dual-holders (i.e., those simultaneously holding a same firm's debt and equity) in corporate innovation. I find that firms held by dual-holders generate fewer but more valuable patents. To establish causality, I use a difference-in-differences approach based on the quasi-natural experiment of financial institution mergers. I further find that the decreased sensitivity of managerial compensation to firm risk might be one possible channel through which dual-holders affect risk shifting. The results suggest that shareholder-creditor conflicts indeed exist and lead to risk shifting, and that institutional dual ownership can partially mitigate this problem. The second chapter studies labor power as an important but largely under-explored determinant of corporate payout policy. Using a regression discontinuity approach that exploits locally exogenous variation in labor's collective bargaining power, I find that an increase in labor power lowers corporate payout. Operating flexibility is a plausible underlying mechanism through which labor power influences corporate payout. Firms use the saved earnings from reductions in payout to invest in net working capital rather than paying off debt or increasing cash holdings. This essay sheds new light on the determinants of payout policy and the role of labor power in corporate finance decisions.
