Fixed asset

About: Fixed asset is a research topic. Over the lifetime, 3483 publications have been published within this topic receiving 44222 citations. The topic is also known as: property, plant, and equipment.

Liquidation Values and Debt Capacity: A Market Equilibrium Approach

Abstract: We explore the determinants of liquidation values of assets, particularly focusing on the potential buyers of assets. WVhen a firm in financial distress needs to sell assets, its industry peers are likely to be experiencing problems themselves, leading to asset sales at prices below value in best use. Such illiquidity makes assets cheap in bad times, and so ex ante is a significant private cost of leverage. We use this focus on asset buyers to explain variation in debt capacity across industries and over the business cycle, as well as the rise in U.S. corporate leverage in the 1980s. How DO FIRMS CHOOSE debt levels, and why do firms or even whole industries sometimes change how much debt they have? Why, for example, have American firms increased their leverage in the 1980s (Bernanke and Campbell (1988), Warshawsky (1990)), and why has this debt increase been the greatest in some industries, such as food and timber? Despite substantial progress in research on leverage, these questions remain largely open. In this paper, we explore an approach to debt capacity based on the cost of asset sales. We argue that the focus on asset sales and liquidations helps clarify the crosssectional determinants of leverage, as well as why debt increased in the 1980s. Williamson (1988) stresses the link between debt capacity and the liquidation value of assets. He argues that assets which are redeployable-have alternative uses-also have high liquidation values. For example, commercial land can be used for many different purposes. Such assets are good candidates for debt finance because, if they are managed improperly, the manager will be unable to pay the debt, and then creditors will take the assets away from him and redeploy them. Williamson thus identifies one important determinant of liquidation value and debt capacity, namely, asset redeploya

Configurations of strategy and structure: Towards a synthesis

Abstract: In recent years the field of business strategy/policy has made some very significant advances. The conceptual work of Porter (1980) and the empirical studies of the PIMS data by Hambrick and his collaborators (1983, 1983a) are among the most interesting. These authors have derived extremely suggestive conceptual typologies and empirical taxonomies of strategy, focusing on variables that have enjoyed much attention from industrial economists — variables that were shown repeatedly to influence performance; those that can often be manipulated by managers. These include differentiation (e.g. innovation, advertising, product quality); cost leadership (capacity utilization, relative direct costs); focus (breadth of product lines, heterogeneity of clientele); and asset parsimony (fixed assets to revenue). Dimensions of market power are also considered (market share rank, barriers to entry, dependence on suppliers and customers), as are performance variables (ROI, earnings variability, growth in market share). The importance of some of these dimensions had already been suggested by Hofer and Schendel (1978) and Henderson (1979).

Environmental disclosure quality in large German companies: Economic incentives, public pressures or institutional conditions?

Abstract: Investors and stakeholders in continental Europe are becoming increasingly concerned about corporate environmental policies. As a result, many firms are voluntarily increasing the extent of their environmental disclosure in their annual report. While mostly unregulated, corporate environmental disclosure does have potential economic significance considering the scarcity of alternative information sources. The purpose of this study is to identify determinants of corporate environmental disclosure using multi-theoretical lenses that rely on economic incentives, public pressures and institutional theory. The study focuses on large firms from a continental Europe country, Germany, with a distinct legal and regulatory context and where environmental concerns are especially acute. Results show that Risk, Ownership, Fixed Assets Age, Firm Size as well as routine determine the level of environmental disclosure by German firms in a given year. Moreover, consistent with institutional theory, results sugge...

The determinants of voluntary financial disclosure by Swiss listed companies

Abstract: The aim of this paper is to relate the extent of disclosure in the annual reports of Swiss listed companies to possible determinants representing agency and political costs. The choice of Switzerland is based on the fact that, prior to the implementation of the new company law on 1 July 1992 Swiss disclosure requirements were very low, so that the major part of the content of the annual report could be considered as voluntarily disclosed. The sample includes the 1991 annual report of 161 industrial and commercial firms. The extent of disclosure is measured by an index based on information whose disclosure is required by the Fourth and Seventh EU Directives. Independent variables are measures of company size, leverage, profitability, ownership structure, internationality, auditor's size, percentage of fixed assets and industry type. Relations are assessed using univariate analyses and multiple regressions. The main result is that size and internationality play a major role in the disclosure policy of firms...

Intangible Assets: Computers and Organizational Capital

Abstract: IN DEVELOPED ECONOMIES, production requires not only such traditional factors as capital and labor but also skills, organizational structures and processes, culture, and other factors collectively referred to as "intangible assets." Detailed investigation of some of these types of assets has found that they are often large in magnitude and have important productivity benefits. For example, Dale Jorgenson and Barbara Fraumeni found that the stock of human capital in the U.S. economy dwarfs that of physical capital and has grown over time. (1) Bronwyn Hall, Zvi Griliches, and Baruch Lev and Theodore Sougiannis found evidence that research and development (R&D) assets bring benefits in the form of positive marginal product and market valuation. (2) Timothy Bresnahan, Brynjolfsson, and Hitt have found that certain organizational practices, when combined with investments in information technology (IT), were associated with significant increases in productivity in the late 1980s and early 1990s. (3) Investors also attempt to incorporate intangible assets into their valuation of firms, and this is one reason that the market value of a firm may differ markedly from the value of its tangible assets alone. In particular, stock market valuations of firms have increasingly diverged from their measured book value in the past decade or so. (4) Part of the explanation may be the growing use of IT and the associated investments in intangible assets. (5) Whereas early applications of computers were primarily directed at factor substitution (particularly of low-skill clerical workers), modern uses of computers have both enabled and necessitated substantial organizational redesign and changes in the skill mix of employees. (6) Collectively, this research argues for a complementarity between computer investment and organizational investment, and specifically a relationship between use of IT and increased demand for skilled workers, greater decentralization of certain decision rights, and team-oriented production. Moreover, case studies and a growing body of statistical analyses suggest that these complementary investments are large. (7) This paper analytically explores the hypothesis that new, intangible organizational assets complement IT capital just as new production processes and factory redesign complemented the adoption of electric motors over 100 years ago. (8) To realize the potential benefits of computerization, investments in additional "assets" such as new organizational processes and structures, worker knowledge, and redesigned monitoring, reporting, and incentive systems may be needed. We study how the financial markets can be used to help identify such assets. In some cases the costs of implementing the new processes, training, and incentive systems may be many times greater than the costs of the computer technology itself. However, the managers who decide to incur these costs presumably expect the present value of the resulting benefits to be no less than these costs, even if they accrue over a period of years and are uncertain. In this sense managers' behavior reflects their belief that they are investing in an economic asset. Assets that are intangible need not be invisible. On the contrary, the presence of intangible organizational assets can be observed in at least three ways. First, some of the specific changes that firms make may be directly observable. In particular, previous work has used survey methods to document a relationship between technology and some aspects of organizational change, such as new business processes, greater demand for skills, and increased employee decisionmaking authority. (9) Firms sometimes try to highlight their investments in these areas, offering tours to customers, investors, and researchers who express an interest in them. A visit to the manufacturing operations of Dell Computer or of a steel mini-mill provides some insight into the effort these firms put into creating various kinds of organizational assets and the resulting productivity implications. …