The aim of the article is to present the method of establishing equity shares in weight average cost of capital (WACC), in which the value of loan capital results from the fixed assumptions accepted in the financial plan (for example a schedule of loan repayment) and own equity is evaluated by...

The aim of the article is to present the method of establishing equity shares in weight average cost of capital (WACC), in which the value of loan capital results from the fixed assumptions accepted in the financial plan (for example a schedule of loan repayment) and own equity is evaluated by...

Economic value added (EVA) is the performance metric bound to be biased by design. The measurement bias comes from contrasting NOPAT, which is a purely operating profit, with the capital charge on the money investors have put into the firm, which is calculated by applying the after tax WACC...

We study how collateral requirements affect corporate policy decisions and present evidence that challenges the trade-off theory between risk management and investment policy due to collateral constraints. We compile a novel dataset on collateral and derivative transactions for all U.S. public...

This paper examines the effects of country-level governance—such as voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption—on the capital structure and investment financing decisions of firms. The full sample...

Effective risk management is a core competency of successful entrepreneurs and investors. The entrepreneur should determine what the most important uncertainties are and how to test and mitigate those uncertainties at the lowest cost. Getting Funded develops frameworks and tools for...

This dissertation suggests that the tax savings, in firm valuation, are discounted at a rate computed through a model presented in the literature review, which is different from the rates usually used for this purpose either by the top text books from, for example, Neves (2002), Ross,...

In this paper we present a model that demonstrates the effect of debt on cost of capital and value for banks with risky assets. Using a static partial equilibrium setting, both in a steady state and steady growth scenario, we derive a bank- specific valuation metric which separately attributes...

Start-up firms typically produce negative cash flows in the first years after their foundation. As a consequence, standard discounted cash flow methods are not applicable, often forcing practioneers into using theoretically dissatisfying devices like multiples. In this paper, we develop a...

We study mechanisms whereby stock market valuations may color corporate investment by using European firm-level data. We find that managers vicariously learn from stock prices when making investment decisions. Specifically, managers' propensity to learn increases in stock price informativeness....