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Author: Erwan Morellec Publisher: ISBN: Category : Languages : en Pages : 58
Book Description
We develop a dynamic tradeoff model to examine the importance of manager-shareholder conflicts in capital structure choice. Using panel data on leverage choices and the model's predictions for different statistical moments of leverage, we show that while refinancing costs help explain the patterns observed in the data, their quantitative effects on debt choices are too small to explain financing decisions. We also show that by adding agency conflicts in the model and giving the manager control over the leverage decision, one can obtain capital structure dynamics consistent with the data. In particular, we find that the model needs an average agency cost of 1.5% of equity value to resolve the low-leverage puzzle and to explain the time series of observed leverage ratios. Our estimates also reveal that the variation in agency costs across firms is sizeable and that the levels of agency conflicts inferred from the data correlate with commonly used proxies for corporate governance.
Author: Erwan Morellec Publisher: ISBN: Category : Languages : en Pages : 58
Book Description
We develop a dynamic tradeoff model to examine the importance of manager-shareholder conflicts in capital structure choice. Using panel data on leverage choices and the model's predictions for different statistical moments of leverage, we show that while refinancing costs help explain the patterns observed in the data, their quantitative effects on debt choices are too small to explain financing decisions. We also show that by adding agency conflicts in the model and giving the manager control over the leverage decision, one can obtain capital structure dynamics consistent with the data. In particular, we find that the model needs an average agency cost of 1.5% of equity value to resolve the low-leverage puzzle and to explain the time series of observed leverage ratios. Our estimates also reveal that the variation in agency costs across firms is sizeable and that the levels of agency conflicts inferred from the data correlate with commonly used proxies for corporate governance.
Author: Li-Kai (Connie) Liao Publisher: ISBN: Category : Languages : en Pages : 41
Book Description
Morellec, Nikolov, and Schürhoff (2012) predict that a self-interested manager prefers a leverage level that is lower than the shareholders' desired level, and effective corporate governance encourages timely capital structure rebalancing. In a U.S. sample during 1996-2008, we confirm that both a higher level of financial leverage and a faster speed of adjustment of leverage toward the shareholders' desired level are associated with a better corporate governance quality as defined by a more independent board featuring CEO-Chairman separation and greater presence of outside directors, coupled with larger institutional shareholding. In contrast, managerial incentive compensation on average discourages use of debt or adjustments toward the shareholders' desired level, consistent with its entrenchment effect. The effect of corporate governance on leverage adjustments is most pronounced when the initial leverage is between the manager's desired level and the shareholders' desired level where the interests of managers and shareholders conflict.
Author: Hoang N. Pham Publisher: Routledge ISBN: 1000540278 Category : Business & Economics Languages : en Pages : 190
Book Description
The relationship between ownership structure and firm performance has been studied extensively in corporate finance and corporate governance literature. Nevertheless, the mediation (path) analysis to examine the issue can be adopted as a new approach to explain why and how ownership structure is related to firm performance and vice versa. This approach calls for full recognition of the roles of agency costs and corporate risk-taking as essential mediating variables in the bi-directional and mediated relationship between ownership structure and firm performance. Based on the agency theory, corporate risk management theory and accounting for the dynamic endogeneity in the ownership–performance relationship, this book develops two-mediator mediation models, including recursive and non-recursive mediation models, to investigate the ownership structure–firm performance relationship. It is demonstrated that agency costs and corporate risk-taking are the ‘missing links’ in the ownership structure–firm performance relationship. Hence, this book brings into attention the mediation and dynamic approach to this issue and enhances the knowledge of the mechanisms for improving firm’s financial performance. This book will be of interest to corporate finance, management and economics researchers and policy makers. Post-graduate research students in corporate governance and corporate finance will also find this book beneficial to the application of econometrics into multi-dimensional and complex issues of the firm, including ownership structure, agency problems, corporate risk management and financial performance.
Author: Gabrielle Wanzenried Publisher: ISBN: Category : Languages : en Pages :
Book Description
This paper analyzes capital structure determinants of UK and continental European firms. Besides considering firm-specific characteristics, it looks at the impact of different corporate governance systems on the capital structure choice. The dynamic framework allows to analyze the adjustment processes taking place over time. Our data contain balance sheet and profit amp; loss account data of 167 European firms from 1988 to 1998. We use fixed erects and moving window regressions and find significant differences in the capital structure choice with respect to characteristics of the firms as well as of the considered corporate governance systems. Also, we find significant changes in the firm behavior over time.
Author: Justin O'Brien Publisher: World Scientific ISBN: 1860948472 Category : Business & Economics Languages : en Pages : 424
Book Description
Addresses the implications of private equity for the governance of corporations, the capital markets in which they operate and the professionals who provide corporate advisory services. Justin O'Brien from Charles Sturt University.
Author: Masahiko Aoki Publisher: Oxford University Press ISBN: 0199218536 Category : Business & Economics Languages : en Pages : 227
Book Description
The 2008-9 financial crisis demands we look anew at the role of corporations, and the working of financial markets around the world. In this book, Masahiko Aoki provides a compelling new analysis of the corporate firm; the role of shareholders, managers and workers; and institutional governance structures.
Author: Mr.V. Haksar Publisher: International Monetary Fund ISBN: 1451875010 Category : Business & Economics Languages : en Pages : 31
Book Description
Recent crises in emerging markets have highlighted the role of the corporate sector in transmitting financial shocks to the macroeconomy. This paper takes stock of the performance of the Thai corporate sector in emerging from the Asian crisis, and discusses remaining challenges and vulnerabilities. Econometric evidence is presented on the impact of excess leverage on performance. Debt levels, though high, have fallen from post-crisis peaks, while returns and corporate cash flows have stabilized. However, the aggregate picture masks significant firm-level variation, which is analyzed by examining estimated distributions for various indicators across firms.
Author: Erwan Morellec
Author: Erwan Morellec
Author: 
Author: Li-Kai (Connie) Liao
Author: Thao Nguyen Huu
Author: Hoang N. Pham
Author: Gabrielle Wanzenried
Author: Justin O'Brien
Author: Ruwani Fernando
Author: Masahiko Aoki
Author: Mr.V. Haksar