Similar Search Results

Risk Management, Capital Budgeting and Capital Structure Policy for Financial Institutions : An Integrated Approach

Froot, Kenneth - 2008

We develop a framework for analyzing the capital allocation and capital structure decisions facing financial institutions such as banks. Our model incorporates two key features: i) value-maximizing banks have a well-founded concern with risk management; and ii) not all the risks they face can be...

Persistent link: https://www.econbiz.de/10012774985

Financing Durable Assets

Rampini, Adriano A. - 2016

This paper studies the effect of durability on the financing of durable assets. We show that more durable assets require larger down payments of internal funds per unit of capital making them harder to finance, because durability affects the price of an asset and hence the overall financing need...

Persistent link: https://www.econbiz.de/10012989134

Macroeconomic Conditions and the Puzzles of Credit Spreads and Capital Structure

Chen, Hui - 2010

I build a dynamic capital structure model that demonstrates how business-cycle variations in expected growth rates, economic uncertainty, and risk premia influence firms' financing and default policies. Countercyclical fluctuations in risk prices, default probabilities, and default losses arise...

Persistent link: https://www.econbiz.de/10013141351

Competition and R&D Financing Decisions : Theory and Evidence from the Biopharmaceutical Industry

Thakor, Richard T. - 2015

How does competition affect innovation and how it is financed in R&D-intensive firms? We study the interaction between competition, R&D investments, and the financing choices of such firms using data on biopharmaceutical firms. To motivate the empirical hypotheses, we develop a model for such...

Persistent link: https://www.econbiz.de/10013029032

Corporate Financing and Investment Decisions When Firms Have Informationthat Investors Do Not Have

Myers, Stewart C. - 2013

This paper considers a firm that must issue common stock to raise cash to undertake a valuable investment opportunity. Management is assumed to know more about the firm's value than potential investors. Investors interpret the firm's actions rationally. An equilibrium model of the issue-invest...

Persistent link: https://www.econbiz.de/10012754693

Vulnerable Banks

Greenwood, Robin - 2012

When a bank experiences a negative shock to its equity, one way to return to target leverage is to sell assets. If asset sales occur at depressed prices, then one bank's sales may impact other banks with common exposures, resulting in contagion. We propose a simple framework that accounts for...

Persistent link: https://www.econbiz.de/10013097784

A Unified Theory of Tobin's Q, Corporate Investment, Financing, and Risk Management

Bolton, Patrick; Chen, Hui; Wang, Neng - 2022

hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance … and asset sales costs; and 6) the return and covariance characteristics of hedging assets the firm can invest in. The … its cash. In between the two barriers, the firm adjusts its capital expenditures, asset sales, and hedging policies …

Persistent link: https://www.econbiz.de/10014209333

The Fundamental Determinants of Risk in Banking

Rosen, Barry - 2008

This study is concerned with establishing the determinants of banks' exposure to risk and with predicting risk in banking. Using the COMPUSTAT data base, prediction rules have been developed for two aspects of risk: systematic risk (risk that is related to covariance with the market portfolio)...

Persistent link: https://www.econbiz.de/10012774866

The Real and Financial Implications of Corporate Hedging

Campello, Murillo - 2010

We study the implications of hedging for firm financing and investment. We do so using an extensive, hand …-collected dataset on corporate hedging activities. Hedging can lower the odds of negative firm realizations, reducing the expected costs … 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

Investment, Consumption, and Hedging Under Incomplete Markets

Wang, Neng - 2014

Entrepreneurs often face undiversifiable idiosyncratic risks from their business investments. We extend the standard real options approach to an incomplete markets environment and analyze the joint decisions of business investments, consumption/savings, and portfolio selection. For a lump-sum...

Persistent link: https://www.econbiz.de/10012751873