Journal ArticleDOI
Do firms have leverage targets? Evidence from acquisitions
TLDR
In this article, the authors examined how deviations from these targets affect how bidders choose to finance acquisitions and how they adjust their capital structure following the acquisitions, and they found that when a bidder's leverage is over its target level, it is less likely to finance the acquisition with debt and more likely to use equity.About:
This article is published in Journal of Financial Economics.The article was published on 2009-07-01. It has received 192 citations till now. The article focuses on the topics: Leverage (negotiation) & Capital structure.read more
Citations
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Journal ArticleDOI
Capital structure dynamics and transitory debt
TL;DR: The authors estimate a dynamic capital structure model with these features and find that it replicates industry leverage very well, explains debt issuances/repayments better than extant tradeoff models, and accounts for the leverage changes accompanying investment spikes.
Journal ArticleDOI
How stable are corporate capital structures
Harry DeAngelo,Richard Roll +1 more
TL;DR: In this article, the authors compare the relative stability of different leverage cross-sections more than a few years apart, with similarities evaporating as the time between them lengthens, showing that capital structure stability is the exception, not the rule, occurs primarily at low leverage, and is virtually always temporary.
Journal ArticleDOI
Debt Financing and Financial Flexibility Evidence from Proactive Leverage Increases
David J. Denis,Stephen B. McKeon +1 more
TL;DR: The authors found that firms that intentionally increase leverage through substantial debt issuances do so primarily as a response to operating needs rather than a desire to make a large equity payout, and that subsequent debt reductions are neither rapid nor the result of pro-active attempts to rebalance the firm's capital structure towards a long run target.
Journal ArticleDOI
Deviation from the target capital structure and acquisition choices.
TL;DR: This paper found that firms that are overleveraged relative to their target debt ratios are less likely to make acquisitions and use cash in their offers and acquire smaller targets and pay lower premiums.
Journal ArticleDOI
Capital Structure Dynamics and Transitory Debt
TL;DR: The authors estimate a dynamic capital structure model with these features and find that it replicates industry leverage very well, explains debt issuances/repayments better than extant tradeoff models, and accounts for the leverage changes accompanying investment spikes.
References
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Journal ArticleDOI
Theory of the firm: Managerial behavior, agency costs and ownership structure
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
Posted Content
Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers
TL;DR: In this paper, the benefits of debt in reducing agency costs of free cash flows, how debt can substitute for dividends, why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidationmotivated takeovers, and why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil.
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Corporate financing and investment decisions when firms have information that investors do not have
TL;DR: In this paper, a firm that must issue common stock to raise cash to undertake a valuable investment opportunity is considered, and an equilibrium model of the issue-invest decision is developed under these assumptions.
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Determinants of corporate borrowing
TL;DR: In this article, the authors predict that corporate borrowing is inversely related to the proportion of market value accounted for by real options and rationalize other aspects of corporate borrowing behavior, such as the practice of matching maturities of assets and debt liabilities.
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Industry costs of equity
Eugene F. Fama,Kenneth R. French +1 more
TL;DR: In this paper, the authors show that standard errors of more than 3.0% per year are typical for both the CAPM and the three-factor model of Fama and French (1993), and these large standard errors are the result of uncertainty about true factor risk premiums and imprecise estimates of the loadings of industries on the risk factors.