Transaction costs foster the creation of (new) wealth through innovation and entrepreneurship, facilitated by "elementary contracts" – risky, non-traded agreements involving time-separated exchanges. However, the current price theory ignores these crucial realities. This research models the...

Extant Information Asymmetry (IA) theories in corporate finance apply, not to all but, only to that subset of firms satisfying the theories` assumptions about: a) the nature of the manager`s private information, and b) the set of securities that can be issued. The research has noted that the...

We study the firm's financing and investment policies when the manager has private information about the firm's cash flows. Prior research in this area places specific restrictions on: i) the nature of the manager's private information and thus on the set of firms to which the theory applies,...

This paper examines the bankruptcy of FirstCity Bancorporation of Texas and its subsequent emergence, through a merger, as FirstCityFinancial Corporation (FCFC). It illustrates several interrelated issues: a) how informational asymmetries and disagreements among the various claimants were...

In the perfect markets corporate finance theory (Modigliani-Miller), public corporations (firms) have no economic function. Their existence therefore cannot be justified. An unsettling implication is that the extant corporate finance theory applies to an economy in which firms are irrelevant....

The cost of capital concept has myriad applications in business decision-making. The standard methodology for deriving cost of capital estimates is based on the seminal Modigliani-Miller analyses. This book generalizes this framework to include non-debt tax shields (e.g., depreciation),...