This paper shows that portfolio constraints have important implications for management compensation and performance evaluation. Concretely, in the presence of portfolio constraints, allowing for benchmarking can be beneficial. Benchmark design arises as an alternative effort inducement mechanism...

In this paper, we propose an integrated model of capital structure to study the partial adjustment process to the optimal long term debt ratio. In our analysis, we consider the characteristics of the institutional environment as a factor that influences such adjustment. We use a sample of quoted...

In this paper the authors survey capital structure theories, from the start-up point, which is considered Modigliani and Miller’s capital structure irrelevance theorem, to recent theories, such as the pecking order and the market timing theory. For each t

The shareholder value maximization is the keystone of the actual stage of capitalism. The objective function of publicly quoted corporations is nowadays the maximization of the shareholders' wealth, i.e. the sum of dividends and capital gains. Despite the increasing international financial...

This paper tries to identify the nature of historical market-to-book ratio, that is, whether it can be used as a market timing proxy or growth opportunity proxy and to find out its impact on capital structure and the adjustment speed to target capital structure. Using a panel data analysis we...

The Market Timing theory of capital structure states that firms that go to the financial markets at the right time can permanently lower their debt ratios. For equity markets, Baker and Wurgler (2002) show that low leverage firms are those that had raised funds when their market valuations (i.e....

This paper shows that portfolio constraints have important implications for management compensation and performance evaluation. In particular, in the presence of portfolio constraints, allowing for benchmarking can be bene…cial. Benchmark design arises as an alternative effort inducement...

The Market Timing theory of capital structure states that firms that go to the financial markets at the right time can permanently lower their debt ratios. For equity markets, Baker and Wurgler (2002) show that low leverage firms are those that had raised funds when their market valuations (i.e....