Capital structure and large investment projects

Dudley, Evan

doi:10.1016/j.jcorpfin.2012.07.007

Cited by 64 publications

(62 citation statements)

References 38 publications

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“…First, we estimate the target leverage for each firm by regressing firms' leverage against several firm characteristics and then taking the fitted values as the target leverage. This is a common strategy applied by previous studies (e.g., Dudley, 2012;Fama & French, 2002;Faulkender et al, 2012;Uysal, 2011) to estimate the unobservable target leverage. We particularly follow Dudley's (2012) procedure by running firm fixed-effect regressions in order to account for unobserved firm heterogeneity.…”

Section: Summary Statistics and Preliminary Resultsmentioning

confidence: 99%

“…This is a common strategy applied by previous studies (e.g., Dudley, 2012;Fama & French, 2002;Faulkender et al, 2012;Uysal, 2011) to estimate the unobservable target leverage. We particularly follow Dudley's (2012) procedure by running firm fixed-effect regressions in order to account for unobserved firm heterogeneity. In unreported analyses, we run several regressions and tests (e.g., Breusch-Pagan and Hausman tests), which indicated firm fixed-effects as the most appropriate estimator.…”

Section: Summary Statistics and Preliminary Resultsmentioning

confidence: 99%

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Capital Structure Adjustment in Brazilian Family Firms

2018

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ResumoAnalisamos em que medida as companhias familiares são diferentes das companhias não familiares em termos de endividamento e ajuste da estrutura de capital. Aplicando um modelo de trade-off dinâmico a uma amostra de companhias brasileiras de 2003 a 2013, foi mostrado que companhias familiares apresentam maior nível de endividamento e menor velocidade de ajuste em comparação às companhias não familiares. Argumenta-se que companhias familiares tendem a ter maior endividamento porque seus gestores são mais confiantes e otimistas que gestores de empresas não familiares. Restrições financeiras derivadas desse alto nível de endividamento previnem empresas familiares sobre alavancadas de ajustar-se rapidamente para uma estrutura de capital alvo.Palavras-chave: estrutura de capital; firmas familiares; velocidade de ajuste; maior acionista último. AbstractWe examine the extent to which family companies are different from non-family companies in their leverage ratios and their capital structure adjustment. By applying a dynamic trade-off model to a sample of Brazilian companies for 2003-2013, we show that family companies have higher leverage and slower adjustment speeds in comparison to non-family companies. We argue that family companies' managers tend toward higher leverage because they are more confident and optimistic than managers of non-family firms. Financial constraints stemming from this high leverage prevent over-leveraged family firms from rapidly adjusting their target capital structure.

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Section: Summary Statistics and Preliminary Resultsmentioning

confidence: 99%

Section: Summary Statistics and Preliminary Resultsmentioning

confidence: 99%

Capital Structure Adjustment in Brazilian Family Firms

2018

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“…Furthermore, Dudley (2012) observes that firms issue more equity to finance the initial stages of a project, but when assets are in place that serve as collateral in the later stages, they issue more debt.…”

Section: Firm Life Cycle and The Willingness To Dilute Controlmentioning

confidence: 99%

Young family firms: Financing decisions and the willingness to dilute control

Keasey

Martínez

Pindado

2015

Journal of Corporate Finance

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We study the relationship between leverage and the willingness of listed family firms to dilute control, proxied by the ownership of the main shareholder. We find that the main owner's stake positively impacts on leverage and that this impact is stronger when the business is a young family firm. Furthermore, the life cycle matters when analyzing this relationship. These results allow us to argue that owners with a greater stake prefer to raise finance via debt rather than dilute their position via equity, and that family firms face a trade-off between their control risk aversion and the need for external financing.

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“…(), Drobetz and Wanzenried (), Byoun (), Elsas and Florysiak (), Warr et al . (), Dudley () and Öztekin and Flannery ().…”

mentioning

confidence: 99%

Leverage adjustment after mergers and acquisitions

Khoo

Durand

Rath

2015

Accounting & Finance

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Australian firms have leverage targets. Speeds of adjustment to a target capital structure are higher than previously published estimates when there are major disruptions to firms' leverage ratios. Firms exploit company-specific characteristics to achieve these targets. Profitability and cash levels are important drivers of the speeds of adjustment. Firms, which have lower profitability or higher cash levels, appear to adjust faster.

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Capital structure and large investment projects

Cited by 64 publications

References 38 publications

Capital Structure Adjustment in Brazilian Family Firms

Capital Structure Adjustment in Brazilian Family Firms

Young family firms: Financing decisions and the willingness to dilute control

Leverage adjustment after mergers and acquisitions

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