The Choice Between Public And Private Debt
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The Choice Between Public And Private Debt
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Author : Takeo Hoshi
language : en
Publisher:
Release Date : 1993
The Choice Between Public And Private Debt written by Takeo Hoshi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Corporations categories.
As a result of deregulation, there was a dramatic shift during the 1980s in Japan away from bank debt financing towards public debt financing: in 1975, more than 90% of the corporate debt of public companies was bank debt; in 1992 it was less than 50%. This paper presents a theory of the choice between bank debt and public debt and then examines the theory using firm level data on borrowing sources in Japan. We find that high net worth companies are more prone to use public debt. We also find that the more successful members of industrial groups (or keiretsu) and less successful owner-managed firms tended to access the public debt markets. We offer a number of interpretations of these results in light of the theory.
Managerial Entrenchment And The Choice Of Debt Financing
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Author : Mr.Amadou N. R. Sy
language : en
Publisher: International Monetary Fund
Release Date : 1999-07-01
Managerial Entrenchment And The Choice Of Debt Financing written by Mr.Amadou N. R. Sy and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-07-01 with Business & Economics categories.
The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm’s credit risk is low, management issues public bonds because of the value gains from increased flexibility rather than reduced restrictions and monitoring. In fact, management’s expected private gains decrease as initial private debt restrictions are selectively relaxed. In contrast, when credit risk is high, management issues private debt because of the value gains and private benefits from renegotiating more stringent restrictions. When the maturity of private debt is shortened, however, privately and publicly placed bonds can be preferred to bank debt.
Managerial Entrenchment And The Choice Of Debt Financing
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Author : Amadou Nicolas Racine Sy
language : en
Publisher:
Release Date : 2006
Managerial Entrenchment And The Choice Of Debt Financing written by Amadou Nicolas Racine Sy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
The paper analyzes the choice between public and private debt by an entrenched manager. The model shows that when the firm`s credit risk is low, management issues public bonds because of the value gains from increased flexibility rather than reduced restrictions and monitoring. In fact, management`s expected private gains decrease as initial private debt restrictions are selectively relaxed. In contrast, when credit risk is high, management issues private debt because of the value gains and private benefits from renegotiating more stringent restrictions. When the maturity of private debt is shortened, however, privately and publicly placed bonds can be preferred to bank debt.
The Choice Of Debt Source For Uk Companies
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Author : Laura Maureen McCann
language : en
Publisher:
Release Date : 2011
The Choice Of Debt Source For Uk Companies written by Laura Maureen McCann and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
This thesis presents an empirical investigation of the choice between different sources of debt finance based on a sample of UK non-financial companies listed on the London Stock Exchange FTSE350 between 2001 and 2008. New evidence is provided on (i) the importance of differentiating between syndicated and bilateral bank loans, and (ii) the impact that bankers sitting on the board of directors have on the borrowing firms' choice of debt source. The evidence presented in this thesis contributes to the large body of US research concerning a firm's choice of debt source. Initially, the study investigates what type of firm chooses to issue particular sources of debt, and why. The findings show that the primary determinant of a firm's choice of debt source is its ability to provide collateral to secure against its debt. Although there is no evidence of bank affiliation playing a significant role in driving access to the public capital markets or to syndicated loans in the UK, issuers of bilateral loans are found to be more likely to have an affiliation to a bank than issuers of public, syndicated bank or non-bank private debt. Secondly, the study examines the stock market response to announcements of public, bank (both syndicated and bilateral), and non-bank private debt. The results provide no evidence of any abnormal stock market response following announcements of either public bonds or non-bank private debt. There is strong evidence of a positive market response to announcements of bank loans, driven by the positive market response to syndicated loans. There is little evidence of any market response to announcements of bilateral loans. The market appears to view announcements of syndicated loans made by companies which have a banker on their board in a positive manner, but no such response is observed for announcements of bilateral loans.
Public Debt As A Form Of Public Finance
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Author : Richard E. Wagner
language : en
Publisher: Cambridge University Press
Release Date : 2019-05-30
Public Debt As A Form Of Public Finance written by Richard E. Wagner and has been published by Cambridge University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-30 with Business & Economics categories.
Economists commit a category mistake when they treat democratic governments as indebted. Monarchs can be indebted, as can individuals. In contrast, democracies can't truly be indebted. They are financial intermediaries that form a bridge between what are often willing borrowers and forced lenders. The language of public debt is an ideological language that promotes politically expressed desires and is not a scientific language that clarifies the practice of public finance. Economists have gone astray by assuming that a government is just another person whose impulses toward prudent action will restrict recourse to public debt and induce rational political action.
Debt Public And Private
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Author : Chamber of Commerce of the United States of America. Committee on Economic Policy
language : en
Publisher:
Release Date : 1961
Debt Public And Private written by Chamber of Commerce of the United States of America. Committee on Economic Policy and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1961 with Debt categories.
Structural Change In Banking
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Author : Michael Klausner
language : en
Publisher: Irwin Professional Publishing
Release Date : 1993
Structural Change In Banking written by Michael Klausner and has been published by Irwin Professional Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993 with Banking law categories.
The thrift crisis and recent weakness in the banking sector has intensified attention toward regulatory reform. But most proposals take as a given the traditional structure of banking, under which a bank holds illiquid loans and liquid liabilities. Structural Change in Banking explores the possibility of more fundamental changes in bank structure, which would reduce the instability that is inherent in the current structure. The major essays in this book, written by leading authors in the field, examine the historical legacy of limitations on bank branching and their consequences on bank structure and stability; how securitization affects the bank structure, risk, and liquidity; the advantages to a bank from having checking account information about its loan customers; and the potential for money market funds and finance companies to become the banks of the future. Structural Change in Banking is an essential tool for bank regulators, legislators, executives, and anyone concerned with rectifying the instability of traditional banking structure. This book not only makes a strong argument for change, it provides an intelligent analysis of alternatives through which credit can be provided.
Global Waves Of Debt
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Author : M. Ayhan Kose
language : en
Publisher: World Bank Publications
Release Date : 2021-03-03
Global Waves Of Debt written by M. Ayhan Kose and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-03-03 with Business & Economics categories.
The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
The Economics Of Public Debt
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Author : Kenneth J. Arrow
language : en
Publisher: Springer
Release Date : 1988-09-19
The Economics Of Public Debt written by Kenneth J. Arrow and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988-09-19 with Business & Economics categories.
A collection of essays presenting new insights into the analysis of public debt theory, recent historical episodes, econometric analyses and policy dilemmas and options. It also documents the perceptions of debt problems from viewpoints of national economies as well as the world economy.
Corporate Financial Decisions
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Author : Jun Qiu
language : en
Publisher:
Release Date : 2015
Corporate Financial Decisions written by Jun Qiu 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.
Corporate financial decision making is primarily a study of alternative financing sources and uses. This thesis investigates three aspects of such decisions. First, we examine the implications of information asymmetry on the choice of security to issue and the effect of issue announcement on share price. We find that the choice between internal funds and external capital is positively related to the level of information asymmetry between managers and investors - firms with higher information asymmetry prefer the use of internal funds. The probability of issuing equity, relative to debt, is dependent on the level of information asymmetry for smaller firms. We find no significant relation between the level of information asymmetry and the choice between equity and debt for larger firms. Our results show that the share price of the firm increases after the announcement of equity issue and drops after a year of the issue of equity. We find such changes in share price are dependent on the stock volatility of the firm. Next, we examine the determinants of debt choice between public debt, syndicated loans, bilateral loans, 144A private debt, and traditional non-bank private debt. Primarily, the variables interests include credit quality, information asymmetry, market conditions, and macroeconomic conditions. We find that market conditions and macroeconomic conditions affect the choice of syndicated loans negatively relative to bilateral loans. The choice of 144A private debt against traditional non-bank private debt is negatively related to credit quality, market conditions and macroeconomic conditions, and is positively related to the level of information asymmetry. We also find that credit quality, information asymmetry, and macroeconomic conditions (market conditions) determine the choice of bank loans over non-bank private debt positively (negatively). The choice of public debt over private debt is positively associated with credit quality and market conditions, and negatively related to information asymmetry and macroeconomic conditions. Finally, we examine whether firms retain external capital to increase their cash holdings for precautionary purposes or to repay the debt. We find that firms hoard more than a quarter of externally raised capital in cash - a source of the observed substantial increase in corporate cash balance in recent years. Precautionary motive is found to drive the increase in cash holdings, that is, finance from external sources. The cost of equity issues has a negative impact on precautionary cash holdings. Moreover, the results suggest that when the equity issue cost is low firms raise large amounts of equity capital and repay their debt. Highly levered firms are more likely to raise equity capital to repay the debt. We also find that firms are less likely to use cash balances to repay the debt. Finally, the evidence suggests that firms have a target level of cash holdings and a target level of debt in their capital structure. Overall, the findings suggest that the financial decisions of a firm are dependent on information asymmetry, credit quality, precautionary motives, market conditions, macroeconomic conditions and that firms have been using a large proportion of externally raised capital to raise their cash holdings.