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The role of strip financing in leveraged buyouts: A theoretical analysisUnknown Date (has links)
A particular feature of financing an LBO transaction is the incorporation of strip financing in which each investor takes a strip of senior debt, junior debt, and equity. Junior debtors who hold a simultaneous ownership of equity and debt have an incentive to postpone a bankruptcy providing the present value of the asset liquidation and earnings at the end of the second period exceeds the value of total debt obligation. This possibility of postponing bankruptcy provides the LBO firm with an extra path of operation through which it can achieve an additional value. / Two models, one for an LBO with strip financing and the other for an LBO without strip financing are built on the basis of the state-preference model to analytically prove two propositions: (1) By incorporating the strip financing into its capital structure, an LBO firm can increase its total value of the firm. (2) By implementing the strip financing, the value of debt of an LBO firm also increases. The implications of the above main results are that the total increment in firm value consists of three components: (1) The bankruptcy costs saved by the postponement of bankruptcy. (2) An additional tax shield due to debt charges and non-debt tax deduction which are created by the postponement of bankruptcy. (3) Value achieved through the continued operation which is made possible by the postponement of bankruptcy. / Source: Dissertation Abstracts International, Volume: 50-03, Section: A, page: 0760. / Major Professor: James S. Ang. / Thesis (Ph.D.)--The Florida State University, 1989.
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Voluntary corporate restructuringUnknown Date (has links)
This dissertation is an investigation of the nature of voluntary corporate restructuring during the period 1971 through 1987. Voluntary restructurings are those types of reorganization where management provides the impetus for the change. In contrast, involuntary restructurings, for example hostile tender offers and leveraged buyouts, are those where an outside party takes an active interest in acquiring the firm. In the sample investigated, it is found that the wealth effect of voluntary restructuring is approximately seven times that of involuntary restructuring. / Two tests are performed: an ex ante test and an ex post test. The purpose of the ex ante test is to document the existence of a restructuring premium and to identify some of the discriminating characteristics of potential self restructuring candidates. The takeover or privatization of a major corporation creates an industry disturbance that results in an indirect threat of takeover for the remaining firms within the same industry. This activity provides the incentive for firms to self restructure. In anticipation of these reorganizations, the market provides a restructuring premium to those firms that it believes has the need, willingness, and ability to reorganize. / Statistically significant, cumulative, abnormal returns of 15% are found to occur over a three year period. Further, these restructuring premiums are found to be greater during the 1980s than during the 1970s. Results indicate that the firms most likely to self restructure are characterized as being large, low risk, older companies with below-average debt/equity ratios. / The ex post test is performed to determine the relative effectiveness of certain organizational strategies. It is found that firms that voluntarily restructured via downsizing (i.e., reducing both assets and debt) and controlling overhead expenses were more successful than firms that did not. In addition, results indicate that companies during the 1980s and those with lower risk were the most lily to reorganize. / Source: Dissertation Abstracts International, Volume: 51-07, Section: A, page: 2475. / Major Professor: James S. Ang. / Thesis (Ph.D.)--The Florida State University, 1990.
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An examination of preferred stock and its effect on common shareholder wealthUnknown Date (has links)
The primary purpose of this dissertation is to investigate selected capital structure theories through the study of the effect of preferred stock issuances on the wealth of common shareholders. These theories include the tax hypothesis of Modigliani and Miller (1963), the asymmetric information hypothesis of Myers and Majluf (1984), the signalling hypotheses of Ross (1977), and the growth hypothesis of Heinkel and Zechner (1990). The secondary purpose is to examine the importance of various features of preferred stock. These features include convertibility, callability, and whether the dividend rate is fixed or adjustable. The hypotheses are tested by estimating the wealth effect of the preferred stock issue announcement on the common shareholders and separating the alternative explanations by relating the wealth effect to the characteristics of the issuer and the issue. / This dissertation provides evidence of a significant negative market reaction to the announcement of the issuance of preferred stock. The negative reaction is more pronounced when only non-regulated firms are included in the sample. The market reaction is not significant for a sub-sample of regulated firms. / This dissertation does not support existing capital structure theories. The evidence fails to support the tax hypothesis, the growth hypothesis, the asymmetric information hypothesis, and the signalling hypothesis. There is also insufficient evidence that the use of free cash flows reduces agency costs. Although the inclusion of tax hypothesis variables and growth hypothesis variables contributes significantly to explaining abnormal returns, the signs of the coefficients are opposite of those predicted by theory. Of the features examined, only callability is found to be significant in explaining abnormal returns, but the sign is opposite of that predicted by theory. / The primary contribution of this dissertation is further examination of capital structure theories in the context of preferred stock issuances. There is considerable evidence on the wealth effects of common stock issuance, but little evidence exists on preferred stock. The secondary contribution is a better understanding of the recent changes and growth in the market for preferred stock. / Source: Dissertation Abstracts International, Volume: 56-11, Section: A, page: 4495. / Major Professor: Pamela P. Peterson. / Thesis (Ph.D.)--The Florida State University, 1995.
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Information theory and dividend announcementsUnknown Date (has links)
When there is informational asymmetry between managers and outside investors, managers can use dividend announcements to send signals about a firm's real prospects to outside investors. As dividends need not be directly related to a firm's earnings prospects, dividend signals are indirect messages from managers. / Previous studies have used excess returns to measure the information effects of dividend announcements. Both changes in expected future cash flows and changes in risk influence stock prices so that excess returns provide a clear signal only when the impact of an event is in one direction. However, average excess returns across a sample may not provide evidence on the information effects of an event when both positive and negative impacts occur within the sample. / The information measure developed here relies on information theory and reflects both separate and aggregate impacts of changes in expected values and changes in uncertainty. The empirical analysis uses jointly estimated implied stock prices (ISPs) and implied standard deviations (ISDs) (using call option data in the Berkeley Options Data Base) as measures of expected cash flows and anticipated risk. / The empirical results here support the hypothesized information content of dividend announcements, confirming results of previous studies. ISDs generally decrease and ISPs increase after dividend announcements. When dividend announcements are grouped into unexpected increases, expected increases, and unchanged dividends, increases in ISPs are largest for unexpected increases. The results also indicate that risk decreases or remains unchanged after dividend announcements. This study argues that due to resolution of uncertainty about imminent dividends, risk decreases after dividend announcements; the empirical results support this argument. / Excess returns were regressed on the information measure; results indicate that excess returns are primarily explained by changes in ISPs and that incremental changes in risk are not significantly related to excess returns. / The sample sizes for this empirical study are small. Results of the empirical analyses generally support the hypotheses proposed in the paper, but results are not statistically significant (at $\alpha \leq$.05). / Source: Dissertation Abstracts International, Volume: 52-02, Section: A, page: 0632. / Major Professor: Elton Scott. / Thesis (Ph.D.)--The Florida State University, 1991.
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A STUDY OF THE EFFECTS OF THE RECENT GROWTH OF BANK HOLDING COMPANIES ON FLORIDA'S BANKING SYSTEMUnknown Date (has links)
Source: Dissertation Abstracts International, Volume: 35-04, Section: A, page: 1847. / Thesis (D.B.A.)--The Florida State University, 1974.
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A Benefit/cost study: the economic effects of educational disruption in Florida during school year 1973/1974Smith, Joseph Thomas Unknown Date (has links)
Source: Dissertation Abstracts International, Volume: 37-01, Section: A, page: 0493. / Thesis (Ph.D.)--The Florida State University, 1975.
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A COST-BENEFIT ANALYSIS OF A NATIONAL STUDENT LOAN PROGRAM: A CASE STUDYOF ICETEX-COLOMBIA WITH POLICY IMPLICATIONS FOR PRIVATE AND PUBLIC RESOURCE ALLOCATIONUnknown Date (has links)
Source: Dissertation Abstracts International, Volume: 37-06, Section: A, page: 3795. / Thesis (Ph.D.)--The Florida State University, 1976.
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AN EXAMINATION OF CALL OPTION WRITING AS A PORTFOLIO MAINTENANCE STRATEGY AND A TEST OF AN EVALUATION MODELUnknown Date (has links)
Source: Dissertation Abstracts International, Volume: 36-06, Section: A, page: 3899. / Thesis (D.B.A.)--The Florida State University, 1975.
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REDISTRIBUTION EFFECTS OF FUNDING FLORIDA'S ELEMENTARY AND SECONDARY EDUCATIONAL SYSTEMUnknown Date (has links)
Source: Dissertation Abstracts International, Volume: 40-02, Section: A, page: 0986. / Thesis (Ph.D.)--The Florida State University, 1978.
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REQUIRED TAX POLICY AND ECONOMIC DEVELOPMENT OF ZAIREUnknown Date (has links)
Source: Dissertation Abstracts International, Volume: 36-06, Section: A, page: 3896. / Thesis (Ph.D.)--The Florida State University, 1975.
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