An empirical analysis of the effect of five financing instruments on the risk of the firm was conducted. This study utilizes the information provided in each firm's annual report along with stock and bond price information. The theories of Modigliani and Miller and Bowman form the basis for the analyses undertaken. An analysis of each financing instrument in isolation, along with a comprehensive analysis examining all five instruments simultaneously, is presented. / A theory relating the risk of the firm to its operating risk and incurrence of debt (leverage) is presented, along with arguments for and against the debt characteristics of the five variables (preferred stock, convertible debt, operating leases, unfunded pensions and deferred taxes). Empirically, a positive association between the financing variable and firm risk would support the pro debt position. The dependent variable was firm risk. Seven independent variables were used including the five financing instruments, the firm's ordinary debt, and the firm's operating risk. / Results indicate that deferred taxes and unfunded pensions are components of leverage, and are positively associated with the risk of the firm. Market values of equity and operating risk were found to be far superior to their accounting counterparts. In additional analyses, neither the form of the empirical model nor the fiscal year end of the firm was found to alter the results. / Source: Dissertation Abstracts International, Volume: 50-05, Section: A, page: 1358. / Major Professor: Kenneth S. Lorek. / Thesis (Ph.D.)--The Florida State University, 1989.
| Identifer | oai:union.ndltd.org:fsu.edu/oai:fsu.digital.flvc.org:fsu_78002 |
| Contributors | Lukawitz, James Martin., Florida State University |
| Source Sets | Florida State University |
| Language | English |
| Detected Language | English |
| Type | Text |
| Format | 187 p. |
| Rights | On campus use only. |
| Relation | Dissertation Abstracts International |
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