No description available.

The paper examines a continuous-time principal-agent model in which agent’s preference exhibits habit formation over consumption. As agent’s concern over the standard of living strengthens, his continuation utility is less sensitive to current wealth but more sensitive to the standard of living, leading to lower demand for risk-sharing compensation. The optimal contract has lower pay-for-performance but incentivizes agent’s higher effort. In the Leland (1994) capital structure model, agent’s habit formation preference combined with the optimal contract lowers firm’s leverage and mitigates the debt-overhang problem. / 2025-05-28T00:00:00Z

The finding of optimal debt-to-equity structure, taking into account the determinants which influence Capital Structure, is an ongoing problem in Corporate Finance. It is confirmed in theory as well as in practice in the world of Corporate Finance. There are several theoretical approaches to optimal Capital Structure, nevertheless, in practice none of these theories can be fully confirmed. The aim of the dissertation is the analysis of determinants of Capital Structure and the assessment of the application of current optimal Capital Structure theories. The significance of the individual determinants of Capital Structure is evaluated and the relationship between Leverage and certain determinants is analyzed, based on regression and correlation analysis. These tasks are based on an international point of view followed by the empirical application to mining companies in the Czech Republic and Europe. The dissertation is divided into 3 main parts which include a theoretical part, an analysis of current findings and, finally, an empirical analysis. In the theoretical part, the basic terms used in the topic of Capital Structure are defined by their different meanings in theory. These are Capital, Capital Structure and Leverage. The determinants of Capital Structure were specified with respect to the optimal Capital Structure theories, and the determination of optimal debt ratio is discussed. The analysis of current findings is focused on the empirical verification of optimal Capital Structure theories, on international examples, and on the example of the Czech Republic. Attention is dedicated to understanding the significance of determinants of Capital Structure and the determination of the relationship between Leverage and determinants of Capital Structure. A comparison of the theoretical and empirical findings is made between a group of American and European companies, and between three groups of countries (developed countries, developing countries and transition countries, including the Czech Republic). The empirical part is dedicated to the analysis of determinants of Capital Structure of mining companies in the Czech Republic and Europe. The analyzed determinants are size, profitability, tangibility of assets, and a non-debt tax shield.

<p>The costs and constraints to financing, and the factors that influence them, play critical roles in the determination of corporate capital structures.</p> <p>Chapter 1 estimates firm-specific marginal cost of debt functions for a large panel of companies between 1980 and 2007. The marginal cost curves are identified by exogenous variation in the marginal tax benefits of debt. The location of a given company's cost of debt function varies with characteristics such as asset collateral, size, book-to-market, intangible assets, cash flows, and whether the firm pays dividends. Quantifying, the total cost of debt is on average 7.9% of asset value at observed levels, reaching as high as 17.8%. Expected default costs constitute approximately half of the total ex ante cost of debt.</p> <p>Chapter 2 uses the intersection between marginal cost of debt functions and marginal benefit of debt functions to examine optimal capital structure. By integrating the area between benefit and cost functions, net benefit of debt at equilibrium levels of leverage is calculated to be 3.5% of asset value, resulting from an estimated gross benefit of debt of 10.4% of asset value and an estimated cost of debt of 6.9%. Furthermore, the cost of being overlevered is asymmetrically higher than the cost of being underlevered. Case studies of several firms reveal that, for some firms, the cost of being suboptimally levered is small while, for other firms, this cost is large, suggesting firms face differing sensitivities to the capital structure choice.</p> <p>Finally, Chapter 3 examines the role of financing constraints on intertemporal capital structure choices of the firm via a structural model of capital investment. In the model, firms maximize value by choosing the amount of capital to invest and the amount of debt to issue. Firms face a dividend non-negativity constraint that restricts them from issuing equity and a debt capacity constraint that restricts them from issuing non-secured debt. The Lagrange multipliers on the two constraints capture the shadow values of being constrained from equity and debt financing, respectively. The two financing constraint measures are parameterized using firm characteristics and are estimated using GMM. The results indicate that these measures capture observed corporate financing behaviors and describe financially constrained firms. Finally, between the two financing constraints, the limiting constraint is the debt restriction, suggesting that firms care about preserving financial slack.</p> / Dissertation

The main aim of this thesis is to describe the optimalization and quantification of a capital structure in a company, both theoretically and practically. The first part comprises general understanding of a quite broad theoretical base. Firstly, the capital structure of a company and its individual parts are defined. Further, there is the analysis of the method of calculation of individual types of costs of capital. Major attention is paid to the description and evaluation of the various theories of the optimalization of capital structure. In the end of the theoretical part, the most important determinants of the capital structure are mentioned. The practical part of the thesis emphasis on the detailed analysis of an optimal capital structure of a real firm - Škoda Auto a.s. whereas the major attention is paid to balancing of the proportion of the company's own equity and foreign capital. The final part of the thesis includes calculation of the company's actual costs of capital and there are recommendations of how it could optimize its capital structure.

This paper investigated the change in corporate debt levels in South Africa from 1994 to 2016. Included is an analysis of factors that companies take into consideration when determining the company's capital structure. This study used data from companies, largely from the mining sector, within sectors listed on the Johannesburg Stock Exchange (JSE), including chemicals, general industries, oil and gas. Four different leverage measures were used to determine the change in capital structure for the period under review, as well as six of the most commonly used determinants of capital structure. A high-level interpretation of the results reflected the following; a slight but relatively consistent increase in the use of debt relative to equity over the period for both the total sample and the mining sector. An increase in the use of long- relative to short term debt was also found, as well as a convergence between the use of current and non-current liabilities. Results from the analysis of the capital structure determinants varied, with some showing statistical significance. Asset tangibility was positively correlated to debt, while profitability and growth had a negative relationship. The relationship between company size, tax and cost of debt and leverage was varied.

The diploma thesis is focused on the issue of the capital structure of a selected company and the possibilities of affecting it from company’s perspective. The basic concepts related to the capital structure, the issue of optimizing the capital structure, the factors that affect the capital structure and the financial performance of the company are explained. Furthermore, the work deals with a proposal of ways or sources, by which the company could optimize its capital structure in order to streamline its business.

This thesis analyses the impact of tax policy on firms' leverage ratios in a balanced panel of 129 medium-sized listed companies from II European countries from 1993 to 2005. A general model of company leverage is applied within which King's tax ratios are used to capture tax policy changes, controlling for non-tax influences suggested by the theory of corporate finance. Various leverage measures are studied to check for the robustness of the estimated model. Total debt is then decomposed into long-term and short-term debt to examine the determinants of different components of debt. The estimation is initially performed within a traditional static framework. The model is estimated using panel data techniques, including the Hausman-Taylor (1981) instrumental variable estimator and the Arellano-Bover (1995) GMM estimator to control for endogeneity. The results suggest that tax policy as measured has a significant but small impact on firms' leverage ratios and the impact is stronger on short-term borrowings than on long-term ones. Non-debt tax shields are a substitute for debt in company activities. With regard to control variables, the empirical findings suggest that non-tax factors affect financing decisions in a way somewhat consistent with the pecking-order theory. There is evidence to support the argument for the differences between the determinants of long-term and short-terin financing decisions. Further research is done by adopting a dynamic adjustment model which allows firms to deviate from their optimal leverage due to random shocks and takes account of adjustment costs incurred when they work back gradually to the optimal level. Arellano-Bond (1991) GMM estimator is applied to obtain consistent estimates. The results substantiate the existence of adjustment costs and corroborate the results from the static model that tax policy measured by King's tax ratios exerts a significant impact on firms' total debt and short-term debt. Finns under the 'Anglo-Saxon' corporate governance systems appear to bear lower adjustment costs and thus have a higher adjustment speed than those under more relation-based systems for all forms of debt. In addition, firms bear lower adjustment costs in adjusting their long-term debt than short-term debt regardless of their corporate governance systems.

L’idée centrale de notre analyse sur l’économie française concerne la suprématie des taux d’intérêt et des dépenses publiques comme instruments de politique économique. Avec la forte hausse des taux d’intérêt au début des années 1980, les entreprises non financières ont commencé à demander moins de crédit, tandis que les ménages français, ainsi que d’autres économies en voie de développement en ont demandé davantage. Parallèlement à ces développements, les marchés spéculatifs ont dominé la bourse, le taux de chômage a augmenté, et un processus de libéralisation a suivi. Nous analysons les conséquences de ce processus de financiarisation et certains scénarios possibles en France, tout en utilisant un modèle de type Cowles Commission, qui est à son tour fondé sur la littérature stock-flux. Une attention particulière est donnée aux variables de répartition et fiscales. Les résultats du modèle indiquent que (étant donné que les entreprises françaises sont prises dans une trappe à liquidité) le taux d’intérêt a perdu son pouvoir comme une variable de politique. En revanche, les dépenses publiques ont une puissance expansionniste importante. / The core of our analysis of the French economy concerns the supremacy of interest rates and government spending as policy instruments in this economy. With the strong increase in interest rates at the beginning of the 1980s, non-financial firms started to demand less credit, whereas French households and other developing economies demanded more. Parallel to these developments, bulls became more abundant in stock markets, the unemployment rate soared and a full process of liberalization ensued. We analyze the consequences of this financialization process and some feasible scenarios in France by means of a Cowles Commission-type model that is in turn based on the stock-flow literature. Particular emphasis is given to distributive and fiscalvariables. The model’s results indicate that (given that French firms are caught in a liquidity trap) the interest rate has lost its power as a policy variable. In contrast, public spending has an important expansionary power.

Um assunto recorrente na teoria de finanças tem sido a forma que uma empresa é financiada, ou seja, sua estrutura de capital e se essa afeta o valor da firma, sua rentabilidade e sua política de investimentos. A participação de capital de terceiros na estrutura de capital das empresas é pertinente em função do efeito da alavancagem financeira, que se refere à ação de captar recursos de terceiros a uma determinada taxa e aplicá-los em ativos que oferecem como retorno uma superior a esta. Assim, ao se utilizar de dívidas, uma empresa tem a possibilidade de aumentar a remuneração dos seus proprietários e, consequentemente, seu valor, por captar recursos a uma taxa e aplicá-los em outra possivelmente maior, embora com essa decisão passe a elevar seu risco, justamente pelo fato de assim passar a ter o compromisso com os credores que realizaram o empréstimo. Percebe-se, dessa forma, um potencial relacionamento entre as decisões de financiamento e investimento. Nesse sentido este trabalho teve como objetivo inicial examinar se a alavancagem financeira afeta as decisões de investimento das empresas brasileiras não financeiras de capital aberto. Para tanto, foram aplicados modelos de regressão linear múltipla com dados em painel no período de 2001 a 2011. Os resultados encontrados permitem dizer que existe uma forte correlação negativa entre a alavancagem financeira e o investimento nas empresas brasileiras não financeiras de capital aberto e que esse relacionamento é ainda mais intenso nas empresas com baixas oportunidades de crescimento. Constatando isso e considerando que diferentes elementos do endividamento podem exercer influências no investimento, um segundo objetivo foi propor um modelo que avalie como os aspectos de maturidade, fonte e custo do endividamento impactam o nível de investimento das empresas brasileiras não financeiras de capital aberto. Foi delineado um novo modelo de regressão linear múltipla que apurasse esses aspectos. Os resultados demonstram que o modelo proposto atende a finalidade desejada. Como conclusões destaca-se que o relacionamento negativo entre alavancagem financeira e investimento encontrado neste trabalho em um país emergente se assemelha ao observado em estudos anteriores em economias desenvolvidas. Além disso, conclui-se que os elementos de maturidade (curto e longo prazo), fonte e custo do capital de terceiros são relevantes para a determinação do investimento do conjunto de empresas estudadas. / A recurring theme in finance theory has been how a company is financed, ie, its capital structure and whether this affects the value of the firm, its profitability and its investment policy. The share of debt in the capital structure of companies is relevant duo to the effect of financial leverage, which refers to the action of raising funds from third parties at a certain rate and apply them in assets that offer returns as one exceeds this. Thus, when using debt, a company has the possibility to improve the incomes of their owners and therefore its value, by raising funds at a rate and apply them in another possibly larger, albeit with this decision elevates your risk, precisely because so going to have to compromise with creditors who took the loan. Thus, perceives a potential relationship between investment and financing decisions. In that sense this study initially aimed to examine whether the financial leverage affects investment decisions of non-financial Brazilian public companies. We applied multiple linear regression models with panel data from 2001 to 2011. Our results say that there is a strong negative relationship between leverage and investment in non-financial Brazilian public companies and this relationship is even stronger in firms with low growth opportunities. Noting this and considering different elements of debt can exert influences on investment, a second objective was to propose a model to evaluate how aspects of maturity, source and cost of debt impact the level of investment by non-financial Brazilian public companies. It was designed a new model of multiple linear regression that consider these aspects. The results demonstrate that the proposed model meets the desired purpose. As conclusions highlight that the negative relationship between leverage and investment found in this study in an emerging country resembles that observed in previous studies in developed economies. Furthermore, we conclude that the elements of maturity (short and long term), source and cost of debt are relevant for determining the investment of all firms studied.