Capital Expenditures And Firm Performance
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Capital Expenditures And Firm Performance
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Author : Adriana S. Cordis
language : en
Publisher:
Release Date : 2015
Capital Expenditures And Firm Performance written by Adriana S. Cordis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
It is well established that firms that undertake high levels of capital investment relative to their scale of operations, as measured by total assets, sales, or similar criteria, tend to have lower subsequent stock returns than firms with the opposite characteristic. Intuitively, this finding is consistent with the hypothesis that firms evaluate investment projects using hurdle rates that reflect expected stock returns, thereby inducing a negative cross-sectional correlation between realized stock returns and observed investment levels. We use a simple two-period model of firm investment to formalize this intuition, and show that the model predicts that the function that relates stock returns to investment is nonlinear, i.e., its slope varies with the level of investment. This prediction finds substantial support in the data. The evidence indicates that the slope of the investment function is negative at low investment levels, close to zero at intermediate investment levels, and negative at high investment levels. Our results, which are robust to the use of narrowly- and broadly-defined measures of capital investment, pose a challenge to the hypothesis that the negative correlation between investment and stock returns is attributable to some sort of overinvestment phenomenon.
An Empirical Investigation Of Postaudit Procedures For Capital Expenditures And Their Association With Firm Performance
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Author : Mary Dove Myers
language : en
Publisher:
Release Date : 1988
An Empirical Investigation Of Postaudit Procedures For Capital Expenditures And Their Association With Firm Performance written by Mary Dove Myers and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988 with Capital budget categories.
A Study Of The Association Of Capital Budgeting Techniques With Firm Performance And Firm Characteristics
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Author : Thomas P. Klammer
language : en
Publisher:
Release Date : 1971
A Study Of The Association Of Capital Budgeting Techniques With Firm Performance And Firm Characteristics written by Thomas P. Klammer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1971 with Capital budget categories.
Long Term Growth Efforts
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Author : John Adamson
language : en
Publisher:
Release Date : 2017
Long Term Growth Efforts written by John Adamson and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This paper examines the internal and external pressures and incentives that affect the decision to pursue capital expenditure (CAPEX) and research and development (R&D) projects in order to assess whether firms are compensating managers and board members effectively in the context of their long term growth efforts (LTGE). The results found in this paper contrast existing literature that suggests firms are under investing in future development. Using firm fundamentals, executive and board compensation and a unique proxy to LTGE, it is found that CAPEX and R&D projects are detrimental to firm performance as measured by profitability and return on assets. Additionally, there is evidence to suggest firms have efficiently structured long term incentive compensation to match this reality.
Capital Structure And Firm Performance
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Author : Arvin Ghosh
language : en
Publisher: Routledge
Release Date : 2017-07-05
Capital Structure And Firm Performance written by Arvin Ghosh and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-07-05 with Business & Economics categories.
Capital structure theory is one of the most dynamic areas of finance and forms the basis for modern thinking on the capital structure of firms. Much controversy has resulted from comparisons of the theory of capital structure originally developed by Franco Modigliani and Merton Miller to real-world situations. Two competing theories have emerged over the years, the optimal capital structure theory and the pecking order theory.Arvin Ghosh begins with an overview of the controversies regarding capital structure theories, and then statistically tests both the optimal capital structure and pecking order theories. Using the binomial approach he analyzes the determinants of capital structure while discussing the role of market power in determining capital structure decisions. Ghosh probes the questions of new stock offerings and stockholders' returns, and analyzes capital structure and executive compensation. He then looks into debt financing ownership structure, and the controversal relationship between capital structure and firm profitability. Finally, he discusses the latest developments in the field of capital structure.A concise overview of a major issue in business economics and finance, this volume provides a fuller understanding of capital structure influence on the financial performance of firms, and will certainly stimulate further debate. While hundreds of scholarly articles have been written on the subject this is the first book to test competing theories against measurements of firms' performance and their underlying capital structure.
Disaggregated Capital Expenditures
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Author : Brooke Beyer
language : en
Publisher:
Release Date : 2019
Disaggregated Capital Expenditures written by Brooke Beyer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Financial analysts and accounting regulators encourage companies to disclose the disaggregation of total capital expenditures (CAPX) into the portion of capital investment intended to sustain current performance (maintenance CAPX (MCAPX)), and the portion invested in new projects/assets to pursue additional opportunities (growth CAPX (GCAPX)). Using a hand-collected sample of voluntary disclosures of disaggregated CAPX, we first document that traditional estimates of the disaggregated components (MCAPX and GCAPX), using currently required financial statement disclosures, are inadequate proxies for the actual (disclosed) values of MCAPX and GCAPX. Specifically, we find that the estimation errors in the disaggregated variables are associated with future financial performance (i.e., changes in sales and earnings), suggesting that the information in the disaggregated disclosure is potentially useful in forecasting firm performance. We then examine whether analysts seem to use the disaggregated information in updating their forecasts and find that estimation errors in the disaggregated variables are associated with analyst forecast revisions of future sales and earnings per share, consistent with analysts incorporating the information in disaggregated CAPX into their forecasts. Our results provide evidence that disaggregated CAPX disclosure is superior to the currently required aggregate CAPX disclosure in explaining/forecasting firms' future financial performance.
Capital Structure And Corporate Performance
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Author : Roshan Boodhoo
language : en
Publisher:
Release Date : 2009
Capital Structure And Corporate Performance written by Roshan Boodhoo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
This paper presents empirical findings in support of the main theories developed on capital structure and its determinants, and on the impact of debt ratio on firm's performance. Empirical results based on 2002 to 2006 accounting data for 40 Mauritian firms are consistent with past literature on the topic, and imply that the agency costs, tax rate, capital expenditures and the ownership structure play a fundamental role in financing decision. Unexpectedly, performance and tangibility, which have been extensively considered as important determinants in financing decision, are not statistically significant to the current model. The current paper provide also additional support to the hypothesis of the existence of an optimal debt ratio, which balances the tax deductions gains from high leverage with the additional expenses that it implies, namely the cost of servicing the debt, and all the costs related to the increased risk of financial distress and bankruptcy. Taken as a whole entity, the optimal capital structure for Mauritian firms analyzed ranges somewhere around 50 percent, within which the marginal benefits derived from leverage are equal to the marginal costs.
Outperform With Expectations Based Management
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Author : Tom Copeland
language : en
Publisher: John Wiley & Sons
Release Date : 2011-09-28
Outperform With Expectations Based Management written by Tom Copeland and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-09-28 with Business & Economics categories.
CEOs and managers live and die by delivering superior performance to shareholders. This is why expectations-based management has been developed. Outperform with Expectations-Based Management (EBM) introduces a revolutionary new performance metric that links performance standards, performance measurement, and the achievement of performance. It's easy to say that if a CEO can get performance measurement right, then performance improvement will follow. But what is the "right" measure of performance, and how do you use it to improve performance? Authors Tom Copeland and Aaron Dolgoff answer these questions and many more, as they show you how to find the measure of performance that has the strongest link to the creation of wealth for the owners of both public and private companies. They answer the puzzle of why growth in earnings is not correlated with shareholder returns and explain the under- and over-investment traps. And they explain how clear communications to investors and managers alike improve value. The bottom line is that share prices go up when companies exceed expectations -- short-term and long-term -- of income statement and balance sheet performance and daily operating value drivers. Gain a complete understanding of EBM and discover how to do this, and much more, while staying competitive in an unforgiving business environment.
Corporate Groups Capital Investments And Stock Returns In Japan
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Author : K.C. John Wei
language : en
Publisher:
Release Date : 2003
Corporate Groups Capital Investments And Stock Returns In Japan written by K.C. John Wei and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
This paper presents evidence that suggests that in Japan, corporate ownership structure affects the relation between capital investment expenditures and firm performance. Specifically, there is a negative relation between capital expenditures and subsequent risk-adjusted returns amongst keiretsu firms, which have a strong banking relationship, but a positive relation amongst independent firms. There is no relation between these returns and financial constraints for keiretsu firms. However, the positive relation between capital investments and stock returns for independent firms is strongest for those firms that have the lowest cash flows, and are thus likely to be the most financially constrained.
Capital Expenditure Decisions
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Author : Donald F. Istvan
language : en
Publisher:
Release Date : 1961
Capital Expenditure Decisions written by Donald F. Istvan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1961 with Capital investments categories.