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Diversified firms often trade at a discount with respect to their focused counterparts. The literature has tried to explain the apparent misallocation of resources with lobbying activities or power struggles. We show that diversification can destroy value even when resources are efficiently...
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Continuing this series on the theory of financial management, the current article investigates capital structure, offering insight into the roles of stockholder wealth maximization, the risk-return trade-off, and agency conflicts. Much literature addresses this topic, and some of the most recent...
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Foreign currency loans to the unhedged non-banking sector are remarkably prevalent in Europe and create a significant … exchange-rate-induced credit risk to European banking sectors. In particular, Swiss franc (CHF)-denominated loans, popular in … that banks in Europe have continuously held more foreign-currency-denominated assets than liabilities, indicating their …
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-affiliated, and low-leverage companies incline more towards this strategy. Credit rating, debt maturity, financial and interest …
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