scholarly journals Equity Financing Regulation and the Optimal Capital Structure: Evidence from China

2012 ◽  
Vol 03 (05) ◽  
pp. 508-517
Author(s):  
Zhengwei Wang ◽  
Wuxiang Zhu
Keyword(s):  
Capital Structure ◽  
Equity Financing ◽  
Optimal Capital Structure ◽  
Optimal Capital

scholarly journals Optimal Capital Structure for BOOT/BOT Model Hydropower Projects in Nepal

2019 ◽  
Vol 5 ◽  
pp. 117-122
Author(s):  
Anup Gautam ◽  
Santosh Kumar Shrestha
Keyword(s):  
Standard Deviation ◽  
Capital Structure ◽  
Financial Analysis ◽  
Equity Financing ◽  
Optimal Capital Structure ◽  
Secondary Sources ◽  
Hydropower Potential ◽  
Optimal Capital ◽  
Average Plant ◽  
The Cost

Nepal has a huge hydropower potential which is yet to be developed. Hydropower are capital intensive infrastructure where financing from single source is not practical, so a financial mix is essential, i.e. debt and equity financing. Projects have been practicing different financial structures. Therefore a proper capital structure is necessary for maximizing return from the hydropower project. The main objective of this research is to determine the parameters that influence hydropower financing, collect data on parameters, analyze them and determine the optimal capital structure for hydroelectric projects in Nepal. The data of operating hydropower projects are collected from secondary sources mainly Department of Electricity Development, Nepal Electricity Authority and other published internet sources. The data is processed and financial analysis is performed for numerous cases using an excel sheet powered by visual basic application. The key parameters affecting hydropower financing are total project cost, annual generation (Dry and wet energy), interest on loan and interest on equity while other parameters are not frequently variable. The feasibility of the project is found to be greatly influenced by the cost of development and generation revenue. The optimal capital structure of hydropower projects is dependent on the key parameters. The cost of hydropower development in Nepal is found to be diverse with an average per megawatt cost of NRs. 219.2 million and standard deviation of NRs. 65.9 million. Energy generation varies from time to time and plant to plant with an average plant factor of 0.53 (Standard Deviation 0.20) out of which 33.16% is dry energy. The cost of loan varies from 8% to 12% and the cost of equity ranges 12% to 16%. The optimal capital structure for BOOT model hydropower projects in Nepal falls in the range of 11% to 34% with an expected value of 20.79%.

scholarly journals Análisis empírico en México de estructuras de capital y su relación con las inversiones significativas (Empirical analysis of capital structures in Mexico and its relation with major investing decisions)

2018 ◽  
Vol 14 (28) ◽  
Author(s):  
Miguel Calzada Mezura
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Equity Financing ◽  
Pecking Order ◽  
Optimal Capital Structure ◽  
Financing Decisions ◽  
Funding Sources ◽  
External Sources ◽  
Study Support ◽  
Optimal Capital

Las Teorías del Pecking Order (Financiamiento Selectivo) y la Estructura Óptima deCapital, mencionan diferentes teoremas para las decisiones de financiamiento. El estudio busca comprender cómo las empresas en México consideran las diferentes fuentes de financiamiento para realizar inversiones significativas. La técnica de estudio de eventos es utilizada para analizar estas decisiones en empresas mexicanas. Las conclusiones del presente estudio apoyan la Teoría del Pecking Order, estableciendo que las inversiones significativas, en el corto plazo, se financian principalmente por fuentes externas y que el financiamiento de capital sólo se observa en las empresas que están limitadas financieramente. Esta postura conlleva a la búsqueda dediferentes contextos para la aplicación o rechazo de la Teoría de la Estructura Óptima de Capital.Palabras clave: estructura de capital, financiamiento, finanzas corporativas, inversiones. Abstract. This study focuses on the Theories of Pecking Order and the Optimal Capital Structure (Also known as Tradeoff Theory). In relation with the theories mentioned above, previous studies described different hypothesis on financing decisions. This study, seeks to understand how companies in Mexico consider the different funding sources to invest in significant investments.The Event Study consideration is used to understand such financing decisions. The findings of this study support the Theory of Pecking Order, showing that significant investments in the shortterm are funded mainly by external sources and equity financing decisions are observed among companies that are financial constrained. This position leads to the search for different contexts in order to test the Optimal Capital Theory.Keywords: capital structure, corporate finance, financing, investments.

scholarly journals The Commitment Role of Equity Financing

2018 ◽  
Vol 17 (4) ◽  
pp. 1232-1260 ◽  
Author(s):  
Matthias Fahn ◽  
Valeria Merlo ◽  
Georg Wamser
Keyword(s):  
Capital Structure ◽  
Debt Financing ◽  
Negative Consequences ◽  
Equity Financing ◽  
Bankruptcy Risk ◽  
Optimal Capital Structure ◽  
Tax Shields ◽  
Optimal Capital ◽  
Financing Behavior

Abstract Existing theories of a firm’s optimal capital structure seem to fail in explaining why many healthy and profitable firms rely heavily on equity financing, even though benefits associated with debt (like tax shields) appear to be high and the bankruptcy risk low. This holds in particular for firms that show a strong commitment toward their workforce and are popular among employees. We demonstrate that such financing behavior may be driven by implicit arrangements made between a firm and its managers/employees. Equity financing generally strengthens a firm’s credibility to honor implicit promises. Debt, however, has an adverse effect on the enforceability of these arrangements because too much debt increases the firm’s reneging temptation, as some of the negative consequences of breaking implicit promises can be shifted to creditors. Our analysis provides an explanation for why some firms only use little debt financing. Predictions made by our theory are in line with a number of empirical results, which seem to stay in contrast to existing theories on capital structure.

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