In this paper, I discuss the importance of internal funds for corporate investment among financially constrained firms. I use the paper ‘Financing Constraints and Corporate Investments’ by Fazzari, Hubbard and Petersen.as a base for my framework. I focus on a specific paper refuting their findings and their response in order to fully understand the benefits and costs of the framework. I then apply the original framework to a recent sample that covers the Great Recession to see the results of the initial paper are still valid today and if the recent recession and elongated recovery had an even more adverse effect on financially constrained firms than was previously noted.

The choice of corporate finance is an important source of tax planning opportunities for multinational companies. Investing companies have to be aware of inconsistent tax classification of equity and debt between countries in particular. Additionally, thin capitalization rules have to be taken into account. In response to changing corporate needs the present paper focuses on the tax consequences of hybrid financial instruments. Only some literature exists on cross-border hybrid finance. Especially the linkage between the two areas - hybrid finance and thin capitalization - both on a national and international level had to be dealt with academically. The paper analyses the substantive scope of thin capitalization regimes in general and in detail. The main finding is that the tax consequences of hybrid instruments reverse when used in thin capitalization situations and that traditional tax policy has to be reconsidered. (author's abstract) / Series: Discussion Papers SFB International Tax Coordination

Abstract Islamic Banking, a growing banking segment related consistent with Sharia law and principles. Since its establishment in 1983, the use of Islamic Banking has grown rapidly in Malaysia as a result of the Malaysian government active effort to make “Malaysia, Asia’s Islamic finance hub.” This study investigates the impact of various regulation changes – applicable to both conventional and Islamic Banking – in Malaysia, on the volume of financing of Islamic Banks. The main way to accommodate for possible omitted variable bias was by including control variables including the production index, real effective exchange rate, price index against the return on assets, return on equity and net income margin ratio. This study was conducted using an autoregressive-distributed lag model, and an event study. Ultimately, the abnormal returns for Islamic vs. Conventional Banks – though statistically significant individually during the event studies, on average were not statistically significant. The implication is that were the sample size to be larger, we may be able to find more statistical significance, but given that the bank population in Malaysia is so small, it is hard to find a statistically significant trend.

Using private firm financial data, I compare operational improvements in public-to-private and private-to-private leveraged transactions in Western Europe between 2003 and 2010. Results are consistent with the recent literature and find operational gains to be significantly smaller then when buyouts were originally analyzed by Jensen (1989) and Kaplan (1989). Public firms experience an increase in raw EBITDA margin of 7.2 percentage points three years post-buyout, while a doubling of firm size yields an increase in EBITDA margin of 4.6 percentage points in year three post-buyout. Using industry-adjusted data, prior corporate form is positive and significant in year two post-buyout. Contrary to prior literature’s expectations, governance state does not impact increases in net profit margin or return on assets. My analysis offers support for the free cash flow theory, as the positive and significant effect of a public structure on EBITDA margin suggests that public firms have greater growth potential for private equity investors and more agency costs than their private counterparts.

During the last two decades there has been an explosion in the number of complex financial instruments that are traded on the financial markets. Naturally, being able to value the increasing number of traded complex financial instruments has an academic interest. Such valuation methods are, however, certainly not only of interest to academics. For agents on the financial markets, it is of crucial importance to be able to assess the value of new exotic securities. This is equally true for financial services firms that construct and promote the instruments, borrowers that sell the products for the financing of their activities and investors that buy the products. Many new financial instruments have attributes that make Contingent Claims Analysis (CCA) superior to other currently known valuation methods. CCA is a technique for determining the price of an asset whose payoffs depend upon the evolution of one or more underlying state variables. One problem that often arises when this framework is used is that it is not possible to find a closed-form solution for the price. Numerical methods must therefore be relied on. Furthermore, in many cases and especially in cases where there is more than one underlying state variable, which many complex financial instruments require for accurate valuation, numerical methods become computationally laborious. Hence, research concerning and development of efficient numerical methods that can be used in the CCA context is important. This dissertation consists of four different papers (papers A to D). Paper A provides discussion of the process of financial innovation. A lengthy appendix is attached to paper A. In this appendix, more thn 100 more or less complex financial instruments are described briefly. Papers B to D have a common theme, which is valuation of complex financial instruments with the help of CCA and numerical methods. The research task of paper B is to answer a question that has unclear status in academic literature. The question is "How do errors (or different modelling choices) in boundary conditions affect solutions when the implicit finite difference method is used?". In papers C and D, numerical methods which can be used to price financial instruments with several underlying state variables are developed and tested. The methods in paper C are finite difference methods, and the method in paper D is a lattice (or tree) approach. / Diss. Stockholm : Handelshögsk.

Diss. Stockholm : Handelshögskolan, 2008.

Bachelor-Arbeit Univ. St. Gallen, 2006.

Socioeconomic changes in American society over the past few decades, as well as an overwhelming amount of uncertainty and misconceptions, have resulted in a majority of Americans to fall short of their financial goals in the short-term, the mid-term, and the long-term. Without proper preparation and financial planning, it is likely that these Americans, and many more, will be unable to reach these goals as well as retire comfortably. Many Americans are overwhelmed with the immense amount of financial information, tools and resources, and as a consequence are unable to plan their finances efficiently and effectively. Americans need a better understanding as to which financial tools are most relevant to their goals, and the proper procedure to initiate a comprehensive financial plan for themselves. Understanding the benefits and drawbacks to each of the components of a comprehensive financial plan, and how they relate and complement each other, of a financial plan will greatly improve the numbers of Americans who are easing their way to a more financially predictable future.

[pt] Esta pesquisa tem três objetivos. Como primeiro objetivo, pretendemos ilustrar uma aplicação prática de avaliação de uma empresa empregando a teoria de opções reais baseada no tratamento dado por Dixit & Pindyck [1994]. Nossa idéia é empregar a técnica de opções reais para avaliar uma empresa que detenha uma opção de adiar um projeto de investimento na presença de competidores, que entram no mercado aleatoriamente. A incerteza do mercado é modelada através de processo estocástico de Movimento Geométrico Browniano, enquanto que a entrada dos competidores é modelada através de uma componente de Poisson. A Companhia Siderúrgica de Tubarão foi escolhida para ilustrar a aplicação devido ao fato da mesma possuir três grandes projetos em fase de estudo/execução. Como segundo objetivo, pretendemos adaptar uma aplicação da teoria de opções reais para avaliação de empresas de alta tecnologia desenvolvida por Schwartz [2000]. Em seu trabalho, Schwartz faz uma avaliação da Amazon.com levando em consideração o fato de que seus acionistas tem perdas de capital limitadas em caso de falência da empresa. Desta forma, empregando técnicas de simulação, Schwartz propõe um corte na distribuição de probabilidades dos fluxos de caixa da empresa nos casos em que ocorrem falências. Nossa idéia é adaptar o processo para avaliar a Globo Cabo, empresa de TV a Cabo, Internet e Telecomunicações das Organizações Globo. Como nosso terceiro objetivo, pretendemos verificar qualitativamente, dentro de nosso universo de exemplos limitado, o quanto a teoria de opções reais pode agregar ao processo de avaliação de empresas. / [en] This research has three objectives. Our first objective is to apply real options theory, based on Dixit & Pindyck [1994] development to value a listed company. In particular, our intention is to value a company that has investment projects with delay options, in markets subjected to competitors random entry. We adopted the Geometric Brownian Motion to model the market uncertainty. The uncertainty concerning the competitors entry is assumed to be described by a Poisson Process. The company we have chosen is the Companhia Siderúrgica de Tubarão. The main reason behind our choice is the fact that the company has publicly announced that it is studying three big projects for investment.As a second objective, we intend to apply real option theory to value a high technology company using the methodology developed by Schwartz [2000]. In his work, Schwartz valued Amazon.com taking into account of the fact that Amazon`s shareholders have limited liability in case of Amazon`s bankruptcy. Our idea is to adapt Schwartz`s framework to value Globo Cabo, the Organizações Globo subsidiary in the business of cable TV, internet and telecommunications. Our third objective is to study qualitatively how much real options theory can contribute to the business valuation process. Our conclusion will take into account our very limited sample. / [es] Las opciones reales basadas en el tratamiento dado por Dixit&Pindyck [1994]. Nuestra idea es emplear la técnica de opciones reales para evaluar una empresa que considere el atraso de un proyecto de inversión en presencia de competidores, que entran en el mercado aleatoriamente. La incerteza del mercado es modelada a través de proceso estocástico de Movimiento Geométrico Browniano, mientras que la entrada de los competidores se modela a través de una componente de Poison. La Compañía Siderúrgica de Tubarão fue elegida para ilustrar la aplicación ya que posee tres grandes proyectos en fase de estudio/ejecución. Como segundo objetivo, se pretende adaptar una aplicación de la teoría de opciones reales para la evaluación de empresas de alta tecnologia desarrollada por Schwartz [2000]. En su trabajo, Schwartz faz una evaluación de la Amazon.com considerando el hecho de que sus acionistas tienen pérdidas de capital limitadas en caso de quiebra de la empresa. De esta forma, utilizando técnicas de simulación, Schwartz propone un corte en la distribución de probabilidades de los flujos de caja de la empresa en los casos de quiebra. Nuestra idea es adaptar el proceso para evaluar la Globo Cabo, empresa de TV a Cabo, Internet y Telecomunicaciones de las Organizaciones Globo. Nuestro tercer objetivo es verificar cualitativamente, dentro de nuestro universo de ejemplos limitado, cuanto la teoría de opciones reales puede agregar al proceso de evaluación de empresas.

p. 1-178 / Submitted by Santiago Fabio (fabio.ssantiago@hotmail.com) on 2013-02-26T18:11:27Z No. of bitstreams: 1 1111.pdf: 779615 bytes, checksum: fd39f959fb007e3ab02d18e81eaedf7a (MD5) / Approved for entry into archive by Tatiana Lima(tatianasl@ufba.br) on 2013-03-13T20:03:42Z (GMT) No. of bitstreams: 1 1111.pdf: 779615 bytes, checksum: fd39f959fb007e3ab02d18e81eaedf7a (MD5) / Made available in DSpace on 2013-03-13T20:03:42Z (GMT). No. of bitstreams: 1 1111.pdf: 779615 bytes, checksum: fd39f959fb007e3ab02d18e81eaedf7a (MD5) Previous issue date: 2006 / A busca por resultados satisfatórios por parte das empresas tem um de seus pilares sustentado sobre as escolhas realizadas no processo de decisão de investimentos. Nesse contexto analítico devem ser consideradas questões ligadas à natureza do projeto que pretende realizar e mais as variáveis que podem gerar resultados positivos ou negativos. Essas variáveis são consideradas na ponderação de risco que um determinado investimento tem em seu entorno e que merece análise quando do processo decisório. Esta dissertação tem como objetivo caracterizar o processo de decisões de investimento de uma grande indústria do segmento de celulose localizada no extremo sul da Bahia. A companhia em questão realizou investimentos elevados na construção de uma unidade fabril de produção de celulose voltada para o mercado externo. Tal magnitude torna a empresa um dos negócios mais importantes da região em que se localiza, sendo esse um dos motivos da escolha da mesma para a realização do estudo. Outro motivo, que torna o estudo justificável, é o fato do contexto em que as indústrias de celulose decidem seus investimentos ser marcado por diversas variáveis de risco que podem comprometer suas escolhas. No caso específico, os elementos de ordem política e ambiental, envolvendo, por exemplo, o cultivo do eucalipto, uma das principais matérias-primas para a produção de celulose e o impacto da indústria. O presente estudo investiga tais variáveis, revisa os debates que cercam o ambiente das empresas de celulose e pesquisa como a empresa em estudo pondera, controla e mitiga a influência dos eventos de risco que fazem parte de sua realidade. O estudo teve como método de coleta de dados o estudo bibliográfico, documental e entrevistas semi-estruturadas. Foi percebido que a indústria em questão utiliza as mais conhecidas técnicas de avaliação de investimentos, valendo-se do uso da simulação de cenários de risco e rigoroso processo de atendimento à legislação ambiental e estratégias de eliminação de risco, mostrando sintonia com as principais teorias sobre avaliação e decisões de investimento de longo prazo. / Salvador