The median U.S. non-regulated firm reports a 47 percent decline in leverage ratio between 1980 and 2010. We investigate whether the cost-benefit tradeoff to shareholders, captured by the valuation impact of an additional dollar of debt on owners' equity, is an explanation for the observed change...

Although there is a strong consensus that the weights in the cost of capital calculation must be market value weights, in a business valuation, appraisers do not use an unique approach to estimate the capital structure that will prevail in the future. In fact, both practitioners and academics...

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...

Does internationalization affect firm valuation? To answer this question, literature mainly considers firms from around the world internationalizing by issuing equity in the USA, whereas the current study focuses on US firms that internationalize by issuing debt in overseas markets. This paper...

Purpose: This study sought to explore the effect of capital management risk on value of the firm among private equity financial firms in Kenya. Design/methodology/approach: Anchored on the agency theory and guided by positivism research philosophy, descriptive research design as well as causal...

Noted scholars argue that (1) economic models of capital taxation have been inadequately adapted to owner-managed enterprises and (2) capital structure researchers have used the wrong models while also improperly measuring key variables. Thus, a model that can overcome these problems should be...

This study aims to test and analyze the effect of capital structure, profitability, investment opportunity set, firm value, earnings per share, and dividend policy, on stock returns. Our research uses regression analysis to determine and analyze the influence of independent variables on...

The purpose of this paper is to determine the relation between a company's indebtedness and its value. We used a sample of 20 North Macedonian companies, listed on the Macedonian Stock Exchange (MSE) mandatory listing, and the data for 6 years' time span. In the paper, we use Panel Data models...

In this paper, we revisit a frequently employed simplification within the WACC approach that company cost of capital kV is supposed to be invariant to the debt ratio and therefore equal to the unlevered cost kU . Even though we know from Miles and Ezzell (1980) that kV formally differs from kU ,...

This paper analyzes the effect of corporate debt offerings on stock prices. Straight debt offerings have non-positive price effects, while convertible debt offerings have significantly negative effects. Public utility mortgage (non-convertible) bond offerings have marginally negative effects,...