Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information

2000 ◽  
Vol 108 (2) ◽  
pp. 324-351 ◽  
Author(s):  
Patrick Bolton ◽  
Xavier Freixas
Keyword(s):  
Asymmetric Information ◽  
Capital Structure ◽  
Financial Market ◽  
Market Equilibrium ◽  
Bank Debt ◽  
Debt Capital

Testing Financial Market Equilibrium under Asymmetric Information

1992 ◽  
Vol 100 (2) ◽  
pp. 317-348 ◽  
Author(s):  
Robert H. Litzenberger ◽  
Vicente Madrigal
Keyword(s):  
Asymmetric Information ◽  
Financial Market ◽  
Market Equilibrium

scholarly journals Order of preference of debts under asymmetric information

2018 ◽  
Vol 7 (2) ◽  
pp. 49-56
Author(s):  
Sabrina Khemiri ◽  
Souad Brinette ◽  
Ramzi Benkraiem ◽  
Anthony Miloudi
Keyword(s):  
Asymmetric Information ◽  
Capital Structure ◽  
Default Risk ◽  
Stock Exchange ◽  
Convertible Bonds ◽  
Ordered Probit ◽  
Bank Debt ◽  
Probit Regression ◽  
Financial Firms ◽  
The Impact

The purpose of this article is to investigate the debt hierarchy adopted by French companies in the context of asymmetric information. In other words, we identify the hierarchy between the three most used forms of debt that best describes the debt behaviors of French companies. The study relies on the ordered probit regression to identify the hierarchy that best describes the debt behaviors of a sample of 121 non-financial firms listed on the Euronext Paris stock exchange. Next, we perform panel-data regressions to investigate the impact of the financial crisis on debt behaviors. The empirical results show that French companies listed on the SBF 250 follow the hierarchy Bank debt, Bond debt, Convertible bonds. This hierarchy is explained primarily by asymmetric information. Other variables that explain the adoption of this hierarchy include the size, default risk, deficit and R&D expenditures of the company. At a time of crisis, despite the strong asymmetric information, the debt hierarchy is modified. To the best of our knowledge, this article constitutes the first study that addresses the existence of a hierarchy between three types of debt: bank debt, bond debt, and convertible bonds. Hence, it extends the previous research on capital structure and provides new managerial insights.

scholarly journals Funding Entrepreneurship and Innovation with Debt Capital: The Relevance of Capital Structure

2020 ◽  
Vol 10 (1) ◽  
pp. 50-59
Author(s):  
George Obeng
Keyword(s):  
Capital Structure ◽  
Emerging Economies ◽  
Strict Adherence ◽  
Funding Sources ◽  
Debt Capital ◽  
Debt Market ◽  
Entrepreneurial Innovation ◽  
The Right

Funding entrepreneurial innovation with debt capital, defiling capital structure optimality, to push an economy forward in emerging economies is the focus of this study. It is targeting potential investors through a survey to seek clarification on their understanding and knowledge on capital structure as to its threat to business and investment failure. It prevailed that, entrepreneurship is not adequately defined to identify the right funding sources. Investors understand capital structure and engage funds at proportions as dictated by necessity and their utilities as against strict adherence to theory. Entrepreneurs accept responsibility to be efficient and innovative for growth and success; failure is not assignable to any theoretical shortcoming. This is acknowledging the optionality of capital structure and the need to develop the debt market to support entrepreneurial drive to ease unemployment in society.

PANDEMI COVID-19: LEBIH BAIK MENAMBAH UTANG ATAU EKUITAS?

2021 ◽  
Vol 19 (1) ◽  
pp. 23
Author(s):  
Bayu Aprillianto ◽  
Oktaviani Ari Wardhaningrum
Keyword(s):  
Capital Structure ◽  
Financial Performance ◽  
Banking Sector ◽  
Stock Exchange ◽  
Equity Capital ◽  
Debt Capital ◽  
Huge Impact ◽  
The Government ◽  
Operational Activities ◽  
Positive Effect

ABSTRACTCovid-19 Pandemic has caused massive changes. Lockdown policy set by the government to suppress the rate of transmission of the virus has had huge impact on the economy. Many companies must suffer losses, even have to declare bankruptcy. Operational activities had been limited that caused the company no longer being able to rely on internal funding to finance its business. The company is faced with a choice of external funding decisions, that is increasing debt (on liability side) or issue shares (on the equity side). This study aims to examine the effect of capital structure during the pandemic on financial performance. This research conducted on 121 companies from consumer non-cyclicals, transportation & logistic, and banking sector listed on Indonesia Stock Exchange. The results show that during the pandemic companies tend to prefer to increase debt than equity. Further testing shows that the companies with dominant debt capital structure have positive effect on financial performance. Meanwhile, the companies with a dominant equity capital structure have no significant effect.Keywords: debt, equity, financial performance, pandemicABSTRAKPandemi Covid-19 menyebabkan perubahan yang sangat masif. Kebijakan lockdown yang dilakukan oleh pemerintah untuk menekan laju penularan virus memberikan dampak yang sangat besar bagi perekonomian. Banyak perusahaan yang harus mengalami kerugian, bahkan harus mengumumkan kebangkrutan. Kegiatan operasional perusahaan yang terbatas mengakibatkan perusahaan tidak lagi dapat mengandalkan pendanaan internal untuk membiayai usahanya. Perusahaan dihadapkan pilihan keputusan pendanaan eksternal, yaitu menambah utang (di sisi liabilitas) atau menerbitkan saham (di sisi ekuitas). Penelitian ini bertujuan untuk menguji pengaruh struktur modal di masa pandemi terhadap kinerja keuangan. Pengujian dilakukan ke 121 perusahaan dari perusahaan sektor barang konsumen non-primer, transport dan logistik, dan perbankan yang terdaftar di Bursa Efek Indonesia. Hasil penelitian menunjukkan bahwa di masa pandemi, perusahaan cenderung lebih memilih menambah utang dibandingkan ekuitas. Pengujian lebih lanjut menunjukkan bahwa sampel perusahaan dengan struktur modal dominan utang menunjukkan hasil berpengaruh positif pada kinerja keuangan. Sedangkan pada sampel perusahaan dengan struktur modal dominan ekuitas menunjukkan hasil tidak signifikan.Kata kunci: ekuitas, kinerja keuangan, pandemi, utang

Corporate Capital Structure and Firm Value: International Evidence on the Special Roles of Bank Debt

2021 ◽  
Vol 1 (1-2) ◽  
pp. 1-41
Author(s):  
Allen N. Berger ◽  
Sadok El Ghoul ◽  
Omrane Guedhami ◽  
Jiarui Guo
Keyword(s):  
Capital Structure ◽  
Firm Value ◽  
Bank Debt ◽  
Corporate Capital ◽  
International Evidence ◽  
Corporate Capital Structure
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