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Financial Structure, Liquidity, and Firm Locations
Almazan, Andres; De Motta, Adolfo - 2008
This paper investigates the relation between a firm's location and its corporate finance decisions. We develop a simple model where being located within an industry cluster increases opportunities to make acquisitions, and to facilitate those acquisitions, firms within clusters maintain more...
Persistent link: https://www.econbiz.de/10012773184
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The Dark Side of Internal Capital Markets : Divisional Rent-Seeking and Inefficient Investment
Scharfstein, David S. - 2008
We develop a model that shows how rent-seeking behavior on the part of division managers can subvert the workings of an internal capital market. In an effort to stop rent-seeking, corporate headquarters will be effectively forced into paying bribes to some division managers. And because...
Persistent link: https://www.econbiz.de/10012774955
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How Relevant is Volatility Forecasting for Financial Risk Management?
Christoffersen, Peter - 2010
It depends. If volatility fluctuates in a forecastable way, then volatility forecasts are useful for risk management; hence the interest in volatility forecastability in the risk management literature. Volatility forecastability, however, varies with horizon, and different horizons are relevant...
Persistent link: https://www.econbiz.de/10012763820
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Taxation, Corporate Financial Policy and the Cost of Capital
Auerbach, Alan J. - 2021
The cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system. The purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest, via the cost of...
Persistent link: https://www.econbiz.de/10013232028
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Fundamental Tax Reform and Corporate Financial Policy
Gentry, William M.; Hubbard, R. Glenn - 2021
How tax reform affects corporate financial decisions helps determine whether reform will increase capital formation and simplify the tax system. This paper describes the effects of fundamental tax reform on corporate tax planning and summarizes economists' knowledge of the magnitude of these...
Persistent link: https://www.econbiz.de/10013249358
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The Valuation of Cash Flow Forecasts : An Empirical Analysis
Kaplan, Steven N.; Ruback, Richard S. - 2021
This paper compares the market value of highly leveraged transactions (HLTs) to the discounted value of their corresponding cash flow forecasts. These forecasts are provided by management to investors and shareholders in 51 HLTs completed between 1983 and 1989. Our estimates of discounted cash...
Persistent link: https://www.econbiz.de/10013313241
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The Real and Financial Implications of Corporate Hedging
Campello, Murillo - 2010
of financial distress. In theory, this should ease a firm's access to credit. Using a tax-based instrumental variable …
Persistent link: https://www.econbiz.de/10013134932
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Behavioral Corporate Finance : An Updated Survey
Baker, Malcolm P. - 2011
We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The … on their decisions. We review relevant psychology, economic theory and predictions, empirical challenges, empirical …
Persistent link: https://www.econbiz.de/10013121051
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Credit Shocks and Aggregate Fluctuations in an Economy with Production Heterogeneity
Khan, Aubhik - 2011
We study the cyclical implications of credit market imperfections in a calibrated dynamic, stochastic general equilibrium model wherein firms face persistent shocks to aggregate and individual productivity. In our model economy, optimal capital reallocation is distorted by two frictions:...
Persistent link: https://www.econbiz.de/10013121072
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Are Corporate Default Probabilities Consistent with the Static Tradeoff Theory?
Hovakimian, Armen - 2011
Default probability plays a central role in the static tradeoff theory of capital structure. We directly test this … theory by regressing the probability of default on proxies for costs and benefits of debt. Contrary to predictions of the … theory, firms with higher bankruptcy costs, i.e., smaller firms and firms with lower asset tangibility, choose capital …
Persistent link: https://www.econbiz.de/10013121593