Capital Structure and Security Issuance Under Heterogeneous Beliefs

2010 ◽  
Author(s):  
Thomas J. Chemmanur ◽  
Jean-Sebastien Michel ◽  
Debarshi K. Nandy ◽  
An Yan
Keyword(s):  
Capital Structure ◽  
Heterogeneous Beliefs ◽  
Security Issuance

CORPORATE FINANCING UNDER HETEROGENEOUS BELIEFS

2017 ◽  
Vol 12 (04) ◽  
pp. 1750019
Author(s):  
WEINING NIU
Keyword(s):  
Numerical Simulation ◽  
Capital Structure ◽  
Stock Price ◽  
Equity Capital ◽  
Heterogeneous Beliefs ◽  
Price Effect ◽  
Corporate Financing ◽  
Optimal Capital Structure ◽  
Price Effects ◽  
Optimal Capital

The paper models firm’s optimal capital structure and stock price effects from the perspective of expectation equilibrium when manager and outside investors have heterogeneous prior and posterior beliefs on firm’s future cash flow. I find that the more optimistic (pessimistic) of outside investors and the more dispersion of beliefs between manager and outside investors, the higher (lower) the issuing price of stocks, the higher (lower) the issuing amount, hence the higher (lower) the proportion of equity capital in capital structure, and a higher positive (negative) stock price effect after security issuance. The numerical simulation also verifies the findings to some extent.

Capital Structure under Heterogeneous Beliefs*

2013 ◽  
Vol 18 (5) ◽  
pp. 1617-1681 ◽  
Author(s):  
Hae Won (Henny) Jung ◽  
Ajay Subramanian
Keyword(s):  
Capital Structure ◽  
Heterogeneous Beliefs
Sign in / Sign up

Export Citation Format

Share Document