Agency Costs Of Free Cash Flow And The Effect Of Shareholder Rights On The Implied Cost Of Equity Capital PDF Download

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Agency Costs of Free Cash Flow and the Effect of Shareholder Rights on the Implied Cost of Equity Capital

Agency Costs of Free Cash Flow and the Effect of Shareholder Rights on the Implied Cost of Equity Capital
Author: Kevin C. W. Chen
Publisher:
Total Pages: 69
Release: 2009
Genre:
ISBN:

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In this paper, we examine the effect of shareholder rights on reducing the cost of equity and the impact of agency problems from free cash flow on this effect. We find that firms with strong shareholder rights have a significantly lower implied cost of equity after controlling for risk factors, price momentum, analysts' forecast biases, and industry effects than do firms with weak shareholder rights. Further analysis shows that the effect of shareholder rights on reducing the cost of equity is significantly stronger for firms with more severe agency problems from free cash flows.


Bank Capital and the Cost of Equity

Bank Capital and the Cost of Equity
Author: Mohamed Belkhir
Publisher: International Monetary Fund
Total Pages: 44
Release: 2019-12-04
Genre: Business & Economics
ISBN: 1513522574

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Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.


The 19th International Conference on Industrial Engineering and Engineering Management

The 19th International Conference on Industrial Engineering and Engineering Management
Author: Ershi Qi
Publisher: Springer Science & Business Media
Total Pages: 1388
Release: 2013-06-03
Genre: Business & Economics
ISBN: 3642384420

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The International Conference on Industrial Engineering and Engineering Management is sponsored by the Chinese Industrial Engineering Institution, CMES, which is the only national-level academic society for Industrial Engineering. The conference is held annually as the major event in this arena. Being the largest and the most authoritative international academic conference held in China, it provides an academic platform for experts and entrepreneurs in the areas of international industrial engineering and management to exchange their research findings. Many experts in various fields from China and around the world gather together at the conference to review, exchange, summarize and promote their achievements in the fields of industrial engineering and engineering management. For example, some experts pay special attention to the current state of the application of related techniques in China as well as their future prospects, such as green product design, quality control and management, supply chain and logistics management to address the need for, amongst other things low-carbon, energy-saving and emission-reduction. They also offer opinions on the outlook for the development of related techniques. The proceedings offers impressive methods and concrete applications for experts from colleges and universities, research institutions and enterprises who are engaged in theoretical research into industrial engineering and engineering management and its applications. As all the papers are of great value from both an academic and a practical point of view, they also provide research data for international scholars who are investigating Chinese style enterprises and engineering management.


Shareholder Protection Reconsidered

Shareholder Protection Reconsidered
Author: Georgios Zouridakis
Publisher: Routledge
Total Pages: 204
Release: 2019-11-26
Genre: Business & Economics
ISBN: 1000757501

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This book examines the role and potential of derivative actions in shareholder protection in public limited companies. Derivative actions have been a focal point of legislators’ agendas on shareholder protection, in the past few decades, throughout Europe and beyond. Nevertheless, there remain jurisdictions, such as Greece, which are still devoid of this remedy. Against this backdrop, this book examines whether and how the derivative action may improve shareholder protection, constituting thus a mechanism that justifies legislative attention. It does so in three parts. First, it analyses the desirable role derivative actions assume in protecting shareholder property, monitoring corporate management and mitigating agency costs, alongside their economic implications, introducing the reader to the contemporary international debate on the topic. Having set the desiderata, the second part proceeds with the comparative analysis of Greek, German and UK law – jurisdictions that have recently reformed their provisions on shareholder protection – examining not only the law on derivative actions and their Greek counterpart remedy but also mechanisms of shareholder protection that do, or could, assume functions similar to those of the derivative action. By critically assessing the merits and failures of the respective UK, German and Greek shareholder protection laws, the book then proceeds to offer (in Part III) a model framework of shareholders’ derivative litigation for jurisdictions considering reform. Written in an accessible format, it will be an invaluable resource for anyone interested in this important aspect of company law and corporate governance.


Stakeholder Orientation, Agency Problems of Free Cash Flow, and the Cost of Equity

Stakeholder Orientation, Agency Problems of Free Cash Flow, and the Cost of Equity
Author: Zhihong Chen
Publisher:
Total Pages: 1
Release: 2020
Genre:
ISBN:

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Using staggered adoptions of Constituency Statutes (CS laws) that authorize but not mandate managers to consider non-owner stakeholders' interests in business decisions, we find that the effect of expanding managers' discretion in considering stakeholder interests on the cost of equity depends on the severity of agency problems of free cash flow. After the adoption of CS laws, the cost of equity decreases for firms with less severe but increases for firms with more severe agency problems. Additional analyses show that for firms with less severe agency problems, CS laws increase the expected future cash flows and reduce the risks, as manifested in a lower exposure to risks related to environmental, social, and governance (ESG) issues and a higher ability to weather negative industry-wide shocks. In contrast, for firms with more severe agency problems, the CS laws reduce the expected value of future cash flows without reducing the risks. Our results are relevant to the current policy debate on whether or not managers' fiduciary duty should be expanded to all stakeholders.


Corporate Governance, Capital Markets, and Capital Budgeting

Corporate Governance, Capital Markets, and Capital Budgeting
Author: Baliira Kalyebara
Publisher: Springer Science & Business Media
Total Pages: 234
Release: 2013-07-31
Genre: Business & Economics
ISBN: 3642359078

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The primary contribution of this book is to integrate the important disciplines which simultaneously impact the investment appraisal process. The book presents a study that develops a new approach to investment appraisal which uses a multiple objective linear programming (MOLP) model to integrate the selected disciplines which include capital markets, corporate governance and capital budgeting. The research covers two case studies, one in the e-commerce sector and another in the airline industry in which the above disciplines are integrated. Readers from the areas of corporate governance, regulation, and accounting would find the survey of different approaches and the new integrated optimization approach particularly useful. ​


Valuation

Valuation
Author: Rajesh Kumar
Publisher: Academic Press
Total Pages: 519
Release: 2015-11-05
Genre: Business & Economics
ISBN: 0128025433

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Valuation: Theories and Concepts provides an understanding on how to value companies that employ non-standard accounting procedures, particularly companies in emerging markets and those that require a wider variety of options than standard texts provide. The book offers a broader, more holistic perspective that is perfectly suited to companies and worldwide markets. By emphasizing cases on valuation, including mergers and acquisition valuation, it responds to the growing expectation that students and professionals must generate comprehensive perspectives based on thorough investigations and a library of valuation theories. Readers will gain a better understanding of the development of complete analyses, including trend analysis of financial parameters, ratio analysis, and differing perspectives on valuation and strategic initiatives. Case studies include stock market performance and synergies and the intrinsic value of the firm are compared with offer price. In addition, full data sets for each chapter are available online. Provides an understanding on how to value companies that employ non-standard accounting procedures, particularly companies in emerging markets Gives readers the ability to compare the intrinsic value of the firm with the offer price Showcases a variety of valuation techniques and provides details about handling each part of the valuation process Each case has data in excel spreadsheets for all companies, and data sets for each chapter are available online


Free Cash Flow and Shareholder Yield

Free Cash Flow and Shareholder Yield
Author: William W. Priest
Publisher: Wiley
Total Pages: 192
Release: 2007-03-30
Genre: Business & Economics
ISBN: 047012976X

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Praise for Free Cash Flow and Shareholder Yield "Free Cash Flow and Shareholder Yield provides a provocative solution to the profound paradigm shift now redefining valuation standards for markets around the globe. In commonsense terms, it defines how the investment community has begun the journey of shifting to the more dependable, robust metric of free cash flow." —Rob Brown, Chief Investment Officer, Genworth Financial Asset Management, Inc. This graph tells a singularly compelling story of the changing order of the drivers of total equity returns. In Free Cash Flow and Shareholder Yield, you will learn how this story is the key to informed investing in an evolving global marketplace.