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Author: Nico Dewaelheyns Publisher: ISBN: Category : Languages : en Pages : 45
Book Description
The literature on capital structure dynamics assumes that companies trade-off the advantages of a leverage adjustment and its costs. In general, private companies are assumed to face relatively large adjustment costs, and should have lower financing flexibility. However, we argue that an important class of private companies - business group affiliates - may face relatively low adjustment costs because of their access to both internal and external capital markets and the beneficial reputation effects of belonging to a group. Our empirical results show significant differences in the composition of the capital structure and the leverage adjustment process between affiliates of private Belgian business groups and comparable stand-alone companies. Group affiliates have higher levels of leverage, and adjust their capital structure more frequently than stand-alones. Our evidence suggests that the flexibility in group companies' capital structure is not solely driven by the use of internal leverage: group affiliates more frequently adjust their external leverage as well, unless the group is in poor financial health, in which case the affiliates' probability of attracting external leverage is severely reduced.
Author: Nico Dewaelheyns Publisher: ISBN: Category : Languages : en Pages : 45
Book Description
The literature on capital structure dynamics assumes that companies trade-off the advantages of a leverage adjustment and its costs. In general, private companies are assumed to face relatively large adjustment costs, and should have lower financing flexibility. However, we argue that an important class of private companies - business group affiliates - may face relatively low adjustment costs because of their access to both internal and external capital markets and the beneficial reputation effects of belonging to a group. Our empirical results show significant differences in the composition of the capital structure and the leverage adjustment process between affiliates of private Belgian business groups and comparable stand-alone companies. Group affiliates have higher levels of leverage, and adjust their capital structure more frequently than stand-alones. Our evidence suggests that the flexibility in group companies' capital structure is not solely driven by the use of internal leverage: group affiliates more frequently adjust their external leverage as well, unless the group is in poor financial health, in which case the affiliates' probability of attracting external leverage is severely reduced.
Author: Lorenzo Sasso Publisher: Kluwer Law International B.V. ISBN: 9041148515 Category : Law Languages : en Pages : 360
Book Description
Despite a clear distinction in law between equity and debt, the results of such a categorization can be misleading. The growth of financial innovation in recent decades necessitates the allocation of control and cash-flow rights in a way that diverges from the classic understanding. Some of the financial instruments issued by companies, so-called hybrid instruments, fall into a grey area between debt and equity, forcing regulators to look beyond the legal form of an instrument to its practical substance. This innovative study, by emphasizing the agency relations and the property law claims embedded in the use of such unconventional instruments, analyses and discusses the governance regulation of hybrids in a way that is primarily functional, departing from more common approaches that focus on tax advantages and internal corporate control. The author assesses the role of hybrid instruments in the modern company, unveiling the costs and benefits of issuing these securities, recognizing and categorizing the different problem fields in which hybrids play an important role, and identifying legal and contracting solutions to governance and finance problems. The full-scale analysis compares the U.K. law dealing with hybrid instruments with the corresponding law of the most relevant U.S. jurisdictions in relation to company law. The following issues, among many others, are raised: decisions under uncertainty when the risks of opportunism of the parties is very high; contract incompleteness and ex post conflicts; protection of convertible bondholders in mergers and acquisitions and in assets disposal; use of convertible bonds to reorganise and restructure a firm; timing of the conversion and the issuer’s call option; majority-minority conflict in venture capital financing; duty of loyalty; fiduciary duties to preference shareholders; and financial contract design for controlling the board’s power in exit events. Throughout, the analysis includes discussion, comparison, and evaluation of statutory provisions, existing legal standards, and strategies for protection. It is unlikely that a more thorough or informative account exists of the complex regulatory problems created by hybrid financial instruments and of the different ways in which regulatory regimes have responded to the problems they raise. Because business parties in these jurisdictions have a lot of scope and a strong incentive to contract for their rights, this book will also be of uncommon practical value to corporate counsel and financial regulators as well as to interested academics.
Author: Paul Gompers Publisher: Anthem Press ISBN: 1783089180 Category : Business & Economics Languages : en Pages : 599
Book Description
’Private Equity’ is an advanced applied corporate finance book with a mixture of chapters devoted to exploring a range of topics from a private equity investor’s perspective. The goal is to understand why and which practices are likely to deliver sustained profitability in the future. The book is a collection of cases based on actual investment decisions at different stages for process tackled by experienced industry professionals. The majority of the chapters deal with growth equity and buyout investments. However, a range of size targets and investments in different geographical markets are covered as well. These markets include several developed economies and emerging markets like China, Russia, Turkey, Egypt and Argentina. This compilation of cases is rich in institutional details, information about different markets, and segments of the industry as well as different players and their investment practices – it is a unique insight into the key alternative asset class.
Author: Gary R. Trugman Publisher: John Wiley & Sons ISBN: 1119483646 Category : Business & Economics Languages : en Pages : 1253
Book Description
This fifth edition simplifies a technical and complex area of practice with real-world experience and examples. Expert author Gary Trugman's informal, easy-to-read style, covers all the bases in the various valuation approaches, methods, and techniques. Author note boxes throughout the publication draw on Trugman's veteran, practical experience to identify critical points in the content. Suitable for all experience levels, you will find valuable information that will improve and fine-tune your everyday activities.
Author: Eugene Nivorozhkin Publisher: ISBN: Category : Languages : en Pages : 35
Book Description
This paper uses a dynamic unrestricted capital structure model to examine the determinants of the private companies' target financial leverage and the speed of adjustment to it in two transition economies, the Czech Republic and Bulgaria. We explicitly model the adjustment of companies' leverage to a target leverage, and this target leverage is itself explained by a set of factors. The panel data methodology combines cross-section and time-series information. The results indicate that the Bulgarian corporate credit markets were less supply-constrained than those of the Czech Republic during the period under investigation. Bulgarian companies adjusted much faster to the target leverage than Czech firms. The speed of adjustment related positively to the distance between target and observed ratio for Bulgarian companies while the relationship was neutral for Czech companies. The conservative policies of Czech banks and the exposure control were likely responsible for the slower adjustment among the larger companies while the opposite were true for Bulgarian banks and companies.
Author: Christopher Parsons Publisher: Now Publishers Inc ISBN: 160198202X Category : Business & Economics Languages : en Pages : 107
Book Description
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: McKinsey & Company Inc. Publisher: John Wiley & Sons ISBN: 1118873939 Category : Business & Economics Languages : en Pages : 848
Book Description
McKinsey & Company's #1 best-selling guide to corporate valuation, now in its sixth edition Valuation is the single best guide of its kind, helping financial professionals worldwide excel at measuring, managing, and maximizing shareholder and company value. This new sixth edition provides insights on the strategic advantages of value-based management, complete detailed instruction, and nuances managers should know about valuation and valuation techniques as applied to different industries, emerging markets, and other special situations. Valuation lies at the crossroads of corporate strategy and finance. In today's economy, it has become an essential role — and one that requires excellence at all points. This guide shows you everything you need to know, and gives you the understanding you need to be effective. Estimate the value of business strategies to drive better decision making Understand which business units a corporate parent is best positioned to own Assess major transactions, including acquisitions, divestitures, and restructurings Design a capital structure that supports strategy and minimizes risk As the valuation function becomes ever more central to long- and short-term strategy, analysts and managers need an authoritative reference to turn to for answers to challenging situations. Valuation stands ahead of the field for its reputation, quality, and prestige, putting the solutions you need right at your fingertips.
Author: Julia Kulik Publisher: ISBN: Category : Languages : en Pages : 21
Book Description
According to foreign research into developed markets, share repurchasing influences the speed of adjustment of companies' capital structure to the target level. It is worth noting that the number of such research studies for emerging markets is rather small.On the basis of an empirical study of a selection of 275 companies from BRICS countries involved in share repurchase for the period of 2005 to 2015 we prove here that share repurchase is an efficient method of correcting an existing capital structure, aligning it to approximate a target level in all BRICS countries. It should be noted that in accordance with our results, companies from Brazil and Russia show the highest speed of adjustment (within 63-80%). This indicates that these companies are able to achieve the target structure within a very short period. Companies from the other countries (India, China, and South Africa) also show a rather high rate of the speed of adjustment (in the range of 44 to 49%).It is worth noting that apart from the share repurchase itself, characteristic features of the companies (as well as special characteristics of local economic factors where they are relevant) influence the speed of adjustment to the target capital structure. We also found out that the most significant factors which have positive effects on the speed of adjustment are the company size, its growth prospects, share of repurchased shares, economic growth rate, inflation rate in the country which adversely affect to a great extent the speed of adjustment to the target capital structure. For Russian companies the most significant determinants are the company size, share of repurchased shares and inflation rate.An assessment of the speed of adjustment to the target capital structure of companies repurchasing shares showed that for Russian companies (for a balance sheet leverage) and for South African companies (for a market financial leverage) the speed of adjustment is not significant, however in general the countries selection and each sub-selection shows that BRICS countries' companies are prone to adjust to the target capital structure quicker when the financial leverage is lower than the target value, while companies with an excess debt load optimize much slower.On the basis of the research results we offer an algorithm pertaining to capital structure management for the companies acting in emerging markets using share repurchase in an open market.
Author: Thorsten Gröne Publisher: ibidem-Verlag / ibidem Press ISBN: 3838256204 Category : Business & Economics Languages : en Pages : 174
Book Description
This study evaluates the value generation potential of private equity for German mid-cap companies. A discussion of the private equity industry and the analysis of the value generation levers serve as a basis to further explore private equity value generation in the German market. First, the special features of German mid-cap companies are examined with a special focus on their financing needs. Second, the German private equity market is introduced and its differentiating features are revealed. The comparison of the findings assesses the general suitability of private equity as a financing option for German mid-cap companies and suggests that many mid-cap companies are not (yet) suited for private equity investments. Finally, the applicability of the identified value generation levers on the German mid-cap segment is analyzed with the help of a conceptual framework in order to evaluate the value generation potential. The results show that the traditional value generation levers are applicable but have to be adjusted with respect to national differences. Private equity associations have to specifically address the strong social considerations in the German business culture and the traditional unity of management, ownership, and supervision in the mid-cap segment in order to realize high rates of return. Anecdotal and recent empirical evidence indicates the relevance of many theoretical conclusions.
Author: Nico Dewaelheyns
Author: Nico Dewaelheyns
Author: Lorenzo Sasso
Author: Paul Gompers
Author: S. K. Chakraborty
Author: Gary R. Trugman
Author: Eugene Nivorozhkin
Author: Christopher Parsons
Author: McKinsey & Company Inc.
Author: Julia Kulik
Author: Thorsten Gröne