Leverage, investment, and firm growth
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In this paper, a negative relation between leverage and future growth at the firm level and, for diversified firms, at the business segment level was shown for firms with low Tobin's q ratio, but not for high q firms or firms in high- q industries.About:
This article is published in Journal of Financial Economics.The article was published on 1996-01-01 and is currently open access. It has received 1010 citations till now. The article focuses on the topics: Leverage (finance) & Investment (macroeconomics).read more
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A Survey of Corporate Governance
TL;DR: The authors surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world, and presents a survey of the literature.
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A Survey of Corporate Governance
Andrei Shleifer,Robert W. Vishny +1 more
TL;DR: Corporate Governance as mentioned in this paper surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world, and shows that most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance.
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The debt-equity choice
TL;DR: In contrast to previous empirical work, out tests explicitly account for the fact that firms may face impediments to movements toward their target ratio, and that the target ratio may change over time as the firm's profitability and stock price change as mentioned in this paper.
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Internal Capital Markets and the Competition for Corporate Resources
TL;DR: In this paper, the authors examine the role of corporate headquarters in allocating scarce resources to competing projects in an internal capital market and examine the process by which internal capital markets channel limited resources to different uses inside a company.
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How Does Financing Impact Investment? The Role of Debt Covenants
TL;DR: In this paper, the authors identify a specific channel (debt covenants) and the corresponding mechanism (transfer of control rights) through which financing frictions impact corporate investment and show that capital investment declines sharply following a financial covenant violation, when creditors use the threat of accelerating the loan to intervene in management.
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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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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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The Theory of Capital Structure
Milton Harris,Artur Raviv +1 more
TL;DR: In this article, a survey of capital structure theories based on agency costs, asymmetric information, product/input market interactions, and corporate control considerations is presented, with a brief overview of the papers surveyed and their relation to each other.
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The investment opportunity set and corporate financing, dividend, and compensation policies☆
Clifford W. Smith,Ross L. Watts +1 more
TL;DR: The authors examine explanations for corporate financing-, dividend-, and compensation-policy choices and find that contracting theories are more important in explaining cross-sectional variation in observed financial, dividend, and compensation policies than either tax-based or signaling theories.
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Managerial discretion and optimal financing policies
TL;DR: In this paper, the authors analyze a firm owned by atomistic shareholders who observe neither cash flows nor management's investment decisions and find that management is forced to invest too little when cash flow is low and too much when it is high.