Capital Structure Puzzle

Myers, Stewart C.

doi:10.3386/w1393

Cited by 2,163 publications

(3,455 citation statements)

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“…First, we include variables to reflect firms' growth opportunities both because firms with growth opportunities are more likely to invest in R&D and because the costs of under-investing in R&D are expected to be higher for such firms (Myers [1984], Berger [1993]). Specifically, we expect RDX to be negatively related to book-to-market ratio (BM), firm size (LOGMV), earnings-toprice ratio (EP) and firm age (AGE).…”

Section: Modeling Randd Intensitymentioning

confidence: 99%

Earnings Guidance and Managerial Myopia

Cheng

Subramanyam

2005

SSRN Journal

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Section: Modeling Randd Intensitymentioning

confidence: 99%

Earnings Guidance and Managerial Myopia

Cheng

Subramanyam

2005

SSRN Journal

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“…As long as information is asymmetrically distributed, financing contracts cannot completely exclude opportunistic behaviour on the part of company managers. That is the basic idea behind models that postulate a hierarchy (pecking order) of different forms of financing (Myers 1984 andMyers/ Majluf 1984). Due to risk premia and monitoring costs, external financing is usually more expensive than financing from internal sources.…”

Section: Theoretical Approaches To Explaining Family Business Financingmentioning

confidence: 99%

Short-Term Borrowing for Long-Term Projects: Are Family Businesses More Susceptible to 'Irrational' Financing Choices?

Peters

Westerheide

2009

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp11006.pdf Non-technical summaryBased on a dataset with 1,417 family and 1,195 non-family businesses in Germany, we find that family businesses rely more heavily than other enterprises on short term credit in order to finance long term investment and innovation projects. We investigate the reasons underlying these differences in the financing behaviour of family businesses and other businesses. Do family businesses tend to use shorter-term -on average more expensive -sources of financing because they face more financial restrictions than comparable non-family enterprises? Or do they have other motives for their ostensibly irrational financing choices, such as a strong desire to remain independent? We approach answering this research question by simultaneously estimating the determinants of financing behaviour and creditworthiness. For both of these facets, we compare family businesses with non-family businesses that have otherwise the same characteristics. Our econometric results show that creditworthiness for family-driven companies tends to be higher than for non-family driven companies. In particular, large family businesses exhibit a higher creditworthiness and use short-term credit more frequently. This goes against the notion that greater use of short-term sources of credit by family enterprises is an indicator for financing restrictions.As a result, we discuss two possible explanations for our observation that family enterprises make greater use of overdrafts and revolving credit: One reason might be that family businesses are offered lines of credit at advantageous rates. These forms of credit therefore do not represent as much of a cost disadvantage as they would for other, less creditworthy businesses. While it is not possible to verify this explanation due to a lack of enterprisespecific data on the cost of the credit lines granted, it seems unlikely that the observed differences in financing behaviour can be explained purely on the basis of interest rate effects.In particular, higher creditworthiness would lower interest rates for all maturities and not necessarily lead to a reduction in the relative costs of short term credit.Another reason might be that family businesses are particularly concerned about staying independent from external capital providers. For this reason, they prefer the less complicated option of an overdraft or revolving credit to a loan dedic...

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“…La littérature sur le sujet est moins abondante mais il existe néammoins quelques contributions importantes. Myers ( 1984) et Myers & Majluf ( 1984) modélisent le cas où une firme possède plus d'information que les financiers sur sa valeur. Le prix des nouvelles émissions d'actions est déterminé sur le marché en fonction de la valeur moyenne des firmes et les firmes choisissent ensuite d'émettre ou de ne pas émettre.…”

Section: Remarquesunclassified

“…Si les deux modes de financement ( La nature des coûts d'agence varie avec la structure financière. Myers (1984) suggère un ordonnancement des différents modes de financement. Il soutient qu'une émission de dette est moins coûteuse à utiliser qu'une émission d'actions, et que, par conséquent, la dette est préférée par les entrepreneurs.…”

Section: Coûts D'agenceunclassified

Information et marchés financiers : une revue de littérature

Poitevin

2009

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RÉSUMÉCette revue de littérature étudie les problèmes d’information dans les marchés financiers. La première section établit un modèle de base qui étudie les effets des asymétries d’information sur le comportement des agents économiques et sur la nature de l’équilibre des marchés financiers. Dans la deuxième section, divers mécanismes incitatifs pouvant éliminer partiellement ou complètement les problèmes d’information sont ajoutés au modèle de base. Finalement, le rôle stratégique de la structure financière est étudiée dans la dernière section.

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Capital Structure Puzzle

Cited by 2,163 publications

References 0 publications

Earnings Guidance and Managerial Myopia

Earnings Guidance and Managerial Myopia

Short-Term Borrowing for Long-Term Projects: Are Family Businesses More Susceptible to 'Irrational' Financing Choices?

Information et marchés financiers : une revue de littérature

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