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Greenwood, Robin M. - 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

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

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

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

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

Leverage and Beliefs : Personal Experience and Risk Taking in Margin Lending

Koudijs, Peter - 2014

What determines risk-bearing capacity and the amount of leverage in financial markets? Using unique archival data on collateralized lending, we show that personal experience can affect individual risk-taking and aggregate leverage. When an investor syndicate speculating in Amsterdam in 1772 went...

Persistent link: https://www.econbiz.de/10013057407

Capital Allocation and Delegation of Decision-Making Authority within Firms

Graham, John R. - 2011

We survey more than 1,000 CEOs and CFOs to understand how capital is allocated, and decision-making authority is delegated, within firms. We find that CEOs are least likely to share or delegate decision-making authority in mergers and acquisitions, relative to delegation of capital structure,...

Persistent link: https://www.econbiz.de/10013120989

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

How Does Government Borrowing Affect Corporate Financing and Investment?

Graham, John R. - 2014

Using a novel dataset of accounting and market information that spans most publicly traded nonfinancial firms over the last century, we show that U.S. federal government debt issuance significantly affects corporate financial policies and balance sheets through its impact on investors' portfolio...

Persistent link: https://www.econbiz.de/10013045580

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

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