This thesis contributes to the empirical literature on how firms meet exceptional financing needs in relation to “investment spikes” or years with unusually large investment activities. In the earlier part of the thesis, I show that the financing of investment during an investment spike is very different from that at other times. I have done this using data for publicly traded US firms over the period 1988 to 2007 and a filtering procedure suggested by Bond et al. (2006). Specifically, external finance, in particular debt finance, is very important in financing investment in years categorized as investment spikes, confirming the findings of Mayer and Sussman (2005). In addition, it has been found that firms with smaller size, lower profitability, more future growth opportunities, fewer tangible assets and more R&D spending tend to use more equity finance in relation to large investment requirements. I also propose the use of the Markov-switching filter to identify investment spikes. In implementing the Markov-switching filter, I apply a first-order two-state Markov-switching mean model to the investment rates de-trended using Hodrick and Prescott's (1997) filter. A Gibbs-sampling procedure is used to produce the marginal posterior distributions of unobserved state variables and model parameters. Among other advantages, this filter allows us to identify multi-year investment spikes. I show that two-year investment spikes identified by the Markov-switching filter are financed quite similarly to single-year investment spikes and that main findings are robust to calendar-time-dependent clustering of investment spikes generated by macroeconomic shocks. In the later part of the thesis, I find there is a positive effect of share liquidity on the propensity to raise debt finance. Using a sample of firm-year observations identified as investment spikes, I find that firms with more liquid shares tend to rely more heavily on debt to finance investment spikes. This result is robust to a control for the effects of firm size and other firm characteristics, the use of various leverage measures, and the use of a whole sample with investment spike characteristics. Another important finding is that firms with more liquid shares tend to have higher target leverage ratios. One interpretation of these results is that information spillovers from the presence of more informative share prices allow firms with more liquid shares to borrow on more favourable terms in normal times, as well as to obtain additional debt finance at lower costs when taking advantage of unusually large investment opportunities.

Chapter 1 of this study investigates the link between a firm’s capital structure and their industry competitive behavior. Given the competitive behavior in certain markets, Cournot or Bertrand, we investigate if there are any inborn characteristics of these markets’ competitive behavior that would create an incentive for Cournot firms to have a different strategic debt level than Bertrand firms. Related theories argue that any industry’s competitive behavior, whether it is Bertrand or Cournot would typically consist of a certain type of debt and pursue a certain type of competitive strategy, based on its classification. In this study, we investigate the debt level of a sample of firms classified into either Cournot or Bertrand competition, i.e. explore competitive behavior as a characteristic of firms that tend to be associated with different debt ratios and determine if the competitive market type does in fact lead to a varying debt ratio target. We used two different measures to categorize competition type, the CSM and the SI measure. Our findings indicate that there is no significant difference between differentiated debt levels between Bertrand and Cournot firms. Chapter 2 of the study examines various factors that may affect American Depository Receipts’ trading volume distribution between their home and US markets. These include factors not previously considered in the extant literature. One such factor is the trading motive (hedging or speculative) of investors. Other factors examined include price impact, relative volatility, market to book ratio, as well as a cultural dimension factor: individualism. Controlling for time-specific effects, we find that the relative motive measure of cross-listed firms has a positive relationship on the trading volume distribution. In addition, when looking at a small sample of firms with different motive factors, we find that hedging motive in the home country leads to an increased proportion of trading in the host country relative to the home country, while speculative motive leads to a decrease in the volume share of the host country relative to the home country. A positive and significant relationship is also observed between volatility and the log of trading volume share. The relationship is negative for liquidity and visibility in relation to the trading volume distribution of cross-listed firm’s stocks. Culture difference at home relative to host is found to positively impact trading volume distribution of cross-listed stocks.

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.

Denna studie syftar till att undersöka huruvida en kvinnlig VD påverkar företagets kapitalstruktur, samt om det finns ett samband mellan könsfördelningen i styrelsen och dess kapitalstruktur i onoterade bolag med en avgränsning till svenska onoterade bolag. Tidigare forskning kring ämnet har gjorts på noterade företag, varpå det blir intressant att genomföra denna forskning på onoterade bolag. Baserat på tidigare forskning har två hypoteser utformats vilket studien utgår ifrån. Studien utgår från ett positivistiskt perspektiv och tillämpar en kvantitativ metod med en deduktiv ansats. Den empiriska sekundärdata är inhämtad från databasen Retriever där finansiella data från onoterade bolags årsredovisningar samlas in för bokslutsåren 2012 - 2017. Sedan har korrelationsanalyser samt multivariata regressionsanalyser genomförts för att kunna upptäcka eventuella samband mellan studiens beroende variabel, kapitalstruktur, och studiens två oberoende variabler, kvinnlig VD och andel kvinnor i styrelsen. Studiens resultat visar ett svagt samband i de båda regressionerna och därmed förkastas studiens två nollhypoteser. Resultatet visar att det finns ett svagt positivt samband mellan kvinnlig VD och kapitalstruktur, och ett svagt negativt samband mellan andel kvinnor i styrelsen och kapitalstruktur. Dock är dessa samband mycket svaga, varpå det är svårt att säga om de oberoende variablerna har en betydlig påverkan på kapitalstrukturen i praktiken. Studiens resultat som visar ett positivt samband mellan kvinnlig VD och kapitalstruktur samt ett negativt samband mellan andelen kvinnor i styrelsen och kapitalstruktur, bidrar till den rådande forskningen kring kvinnors inverkan på risk, närmare bestämt onoterade företags finansiella risk. Studiens praktiska bidrag är att huruvida företagets VD är kvinna eller ej, samt hur könsfördelningen ser ut i företaget, kan påverka kapitalstrukturen i företaget baserat på män och kvinnors olika risktagande och tankar vid finansiella beslut. Denna studie tillämpar tvärsnittsdata vilket innebär att de data som analyseras är från en och samma tidpunkt vilket gör att vi inte kan undersöka ett kausalt samband, därmed skulle det vara intressant att studera flera fall över tid. Ett annat förslag är att undersöka detta samband utifrån ett kvalitativt perspektiv, det vill säga genom att intervjua verkställande direktörer och styrelsemedlemmar för att möjligen få en djupare insikt i deras tankar kring detta ämne. Ett tredje förslag är att genomföra en liknande undersökning fast på både onoterade och noterade bolag för att sedan göra en jämförelse mellan de olika bolagstyperna. / This study aims to investigate whether a female CEO affects the company’s capital structure, and whether there is a relationship between the gender distribution in the board and its capital structure in unlisted companies, with a delimitation to Swedish unlisted companies. Previous research on the topic has been done on listed companies, and therefore it will be interesting to carry out this research on unlisted companies. Based on the previous research, the study has designed two hypotheses on which the study is based. The study has a positivistic perspective and applies a quantitative method with a deductive approach. The empirical secondary data is obtained from the database Retriever where financial data from unlisted companies' annual reports are collected for the financial years 2012-2017. Then, correlation analyses and multivariate regression analyses have been carried out in order to be able to detect any connection between the study's dependent variable, capital structure, and the study's independent variables, female CEO and proportion of women on the board. The study's results show a weak connection in the two regressions and thus the study's two zero hypotheses are rejected. The results show that there is a weak positive correlation between female CEO and capital structure, and a weak negative correlation between the proportion of women on the board and capital structure. However, these relationships are very weak, and it is difficult to say whether the independent variables have a significant impact on the capital structure in practice. The study's results, which show a positive correlation between the female CEO and the capital structure, as well as a negative correlation between the proportion of women on the board and capital structure, contribute to the prevailing research on women's impact on risk, more specifically unlisted companies' financial risk. The study's practical contribution is that whether the company's CEO is a woman or not, and how the gender distribution looks in the company, can affect the capital structure of the company based on men and women's different risk-taking and thoughts on financial decisions. This study applies cross-sectional data, which means that the data analyzed is from one and the same time, which means that we cannot investigate a causal relationship, thus it would be interesting to study several cases over time. Another proposal is to investigate this connection from a qualitative perspective, ie by interviewing CEOs and board members in order to possibly gain a deeper insight into their thoughts on this subject. A third proposal is to conduct a similar survey on both unlisted and listed companies in order to then make a comparison between the different types of companies.

This paper examines the main drivers of leverage levels in private equity-sponsored leveraged buyouts (LBOs). In order to find out what drives LBO leverage, we analyse deal financing of 71 European LBO deals completed between 2005 and 2015. By conducting univariate t-test and multiple regression analysis, we analyse the predictive power of a number of classical capital structure determinants (i.e. firm-specific factors) on levels of debt financing in LBOs. In addition, the state of the credit market is considered as a potential determinant of LBO leverage. We find that credit market conditions have a significant effect on levels of debt financing in LBOs and suggest that the market timing theory can explain LBO leverage better than classical leverage determinants, i.e. firm specific factors derived from classical capital structure theories. The results also indicate a negative relationship between target firms’ tax rate and LBO leverage. We also find that target firms’ free cash flow prior to buyout has no significant impact on leverage in LBOs, something that contradicts much previous research.

O presente estudo objetiva investigar a materialidade do rating de crédito sobre as decisões de estrutura de capital, uma vez que diferentes níveis de rating podem representar melhores ou piores condições para a captação dos recursos externos necessários ao financiamento empresarial. A hipótese rating de crédito-estrutura de capital sugere que, após um rebaixamento no rating, as empresas adotem um perfil mais conservador nas decisões de estrutura de capital visando restabelecer as condições que possibilitem a recuperação do rating anterior. Essa relação foi estudada por meio da análise do impacto das reclassificações do rating sobre o balanceamento da estrutura de capital ao nível-alvo de endividamento de empresas latino americanas não-financeiras com algum rating designado no período 2000- 2014. Os resultados evidenciam que muitos dos preceitos da hipótese teórica também prevalecem para as empresas latinas, principalmente quando avaliados sob a perspectiva das características institucionais da região. / This study investigates credit rating relevance on firm\'s capital structure decision-making once different rating levels may imply better or worse funding conditions. The credit ratingcapital structure hypothesis suggests that firms adopt conservative capital structure decisions after rating downgrades aiming to retrieve necessary conditions to restore a better rating. This relationship was studied by analyzing the impact of credit rating changes on target leverage balance of the capital structure of non-financial Latin American firms with a credit rating designated during the period of 2000-2014. Results show that many of the theoretical assumptions prevail for Latin American firms, especially if evaluated from a perspective of the region institutional characteristics.

Made available in DSpace on 2016-04-25T16:44:30Z (GMT). No. of bitstreams: 1 Marli Helena Colangelo Mantovani.pdf: 858356 bytes, checksum: 8738966ab8f6867b3af25f7ccb67086a (MD5) Previous issue date: 2012-07-31 / The banking sector has prominent position in the economy, dealing with financial resources, providing innovative solutions and mainly by the constant pursuit of increase profitability. There are many reasons for greater profitability of banks, as the high competition in the sector and the pressures of managers for higher returns through riskier operations. Although there are some academic studies on capital structure and profitability of banks, the explanation of leverage and its relationship with banks profitability is still an open question. This paper explores the empirical relevance of the relationship between leverage and profitability of Brazilian banks. It is an empirical research, which seeks to raise exploratory directions, pointing out degrees of correlations, measured by estimation with panel data. The results of this work, based on sample of Brazilian banks listed on the Bolsa de Valores de São Paulo, showed significant relationships between indicators of leverage and profitability indicators. Some considerations are suggested to justify the results achieved, as the increased volumes in funding costs in relation to the total equity ratio and the Capital Adequacy Ratio, that have influenced in a positive way the income on equity / O setor bancário possui cada vez mais posição de destaque na economia, por lidar com recursos financeiros, por sempre proporcionar inovações e principalmente pela busca constante do aumento da rentabilidade. Muitas são as razões da busca por maior rentabilidade, como a alta concorrência do setor e as pressões dos administradores por maiores retornos através de operações mais arriscadas. Embora já existam alguns estudos acadêmicos sobre estrutura de capital e rentabilidade dos bancos, a alavancagem bancária e sua relação com variáveis de rentabilidade ainda é uma questão em aberto. Esta dissertação explora a relevância empírica da relação entre alavancagem e rentabilidade dos bancos brasileiros. Trata-se de uma pesquisa empírica, a qual procura levantar indicações exploratórias, evidenciadas por graus de correlações, mensurados através de estimação com dados em painel. Os resultados encontrados neste trabalho, com base em amostra composta por bancos brasileiros listados na Bolsa de Valores de São Paulo, evidenciaram relações significativas entre os indicadores de alavancagem e os indicadores de rentabilidade. Algumas considerações são sugeridas para justificar os resultados alcançados, como os aumentos no volume de custo de captação, na relação patrimônio total e ativo total e no índice da Basiléia, que influenciaram de forma positiva o lucro líquido sobre o patrimônio líquido

The literature suggests that when taking tax effects into account, debt ought to be preferable to equity. Thus, with all else being equal, levered firms are expected to show higher firm values. However, there are no uniform predictions of the size of this tax benefit from interest deductibility nor on the effect of changes in interest deductibility. We believe that the German corporate tax reform in 2008, which introduced an interest barrier, can serve as a promising "quasiexperiment" to investigate the effects from a reform of interest deductibility. A study of this reform on the basis of German financial statement data is of general interest because, first, similar interest barriers have been introduced in several countries and proposed by the OECD to fight BEPS. Second, the major characteristics of the German tax system can be regarded as representative for most European and major Asian countries. Third, single entity financial statements for German companies allows us to capture tax and capital structure details that have not been available in most prior studies. With significance at the 5% level, we find evidence that the companies that are affected by the interest barrier reduce their leverage by 4.7 percentage points more than companies that are not affected by the interest barrier. We are the first to employ a detailed matching approach to the underlying rich dataset, which enables us to overcome several limitations of previous studies. Our results imply that capital structure reactions most likely have been underestimated in previous studies. / Series: WU International Taxation Research Paper Series

This study examines the relationship between R&D intensity (R&D/sales) and firm value. Additionally, both the moderating effect of endogenous firm characteristics (i.e. firm size, leverage and the interaction between size and leverage) and institutional quality are considered. By employing a sample of 1,833 firms throughout 49 countries, this study finds evidence supporting a positive association between R&D and firm value in its cross-national sample. Moreover, the results support the positive moderating effect of leverage on the relationship between R&D and firm value, in favour of the disciplining role of debt. Furthermore, a negative moderating effect of firm size is found, suggesting that smaller firms possess a superior ability to appropriate value from their R&D investments. Lastly, the size-leverage interaction reveals that small firms with high leverage reap the greatest firm value from their R&D investments.

Yes / This paper examines how deviation from firms’ target leverage influences their decisions on undertaking foreign acquisitions. Using a sample of 5746 completed bids by UK acquirers from 1987 to 2012, we observe that over-deviated firms are more likely to acquire foreign targets. Consistent with co-insurance theory, we find that over-deviated firms engage in foreign acquisition deals to relieve their financial constraints and to mitigate their financial distress risk. We also note that foreign acquisitions enhance over-deviated firms’ value and performance, measured by Tobin’s q and return on assets (ROA) respectively. These findings support the view that over-deviated firms pursue the most value-enhancing acquisitions. Overall, this paper suggests that co-insurance effects, value creation and performance improvements are the main incentives for over-deviated firms’ involvement in foreign acquisitions. / Financial support of Zagazig University in Egypt / The full-text of this article will be released for public view at the end of the publisher embargo on 02 Mar 2019.