Risk Sharing, the Cost of Equity and the Optimal Capital Structure of the Regulated Firm

Stones, Clive J

doi:10.1007/s11151-007-9131-2

Cited by 11 publications

(4 citation statements)

References 19 publications

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“…Stones (2007) demonstrated that the allocation of market risk between consumers and shareholders is influenced by the capital structure of the regulated firm. His model embodies the Lagrangian method and a standard von NeumannÀMorgenstern function of the consumers' utility in income.…”

Section: Previous Studies On Sharingmentioning

confidence: 99%

Cost Sharing and Bankruptcy Law Orientation

Stef

2015

Economic and Legal Issues in Competition, Intellectual Property, Bankruptcy, and the Cost of Raising Children

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In bankruptcy, a reorganization procedure is based on the terms of a reorganization plan aimed to save a financially distressed firm. We provide an original approach of the reorganization plan that we treated as a future contract that demands to creditors a certain degree of cost sharing. This paper examines how the sharing of the reorganization plan costs influences the bankruptcy outcome of such firm.The sharing of the costs between creditors and debtor is analyzed by a static theoretical model that uses a Lagrangian approach.We show that debtors have strong incentives to propose reorganization plans which provide an expected gain for creditors higher than the liquidation value of the firm and lower than the payment of the reorganization plan with an optimal sharing degree. Hence, a reorganization plan can be rejected by creditors if the sharing degree is too important.The liquidation of the firm can be avoided if the design of the reorganization plan is improved by performing an appraisal or purchasing the services of an audit company.The novelty of this paper resides in the distinction of two types of bankruptcy legal systems. The first one represents a pro-creditor or a creditor-friendly bankruptcy system in which the claimants' payment is not limited to a fixed value written in the reorganization plan. Conversely, we treated the case of a debtor-friendly bankruptcy system which limits the creditors' payment. The results of our model hold independently of the bankruptcy law orientation, that is, pro-creditor or pro-debtor.

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Section: Previous Studies On Sharingmentioning

confidence: 99%

Cost Sharing and Bankruptcy Law Orientation

Stef

2015

Economic and Legal Issues in Competition, Intellectual Property, Bankruptcy, and the Cost of Raising Children

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“…7 A literatura aqui apresentada foca no uso estratégico da alavancagem pela firma regulada. Há ainda outra linha de pesquisa, não explorada neste artigo, que foca na definição da alavancagem das firmas reguladas por parte do regulador para maximizar o bem-estar (ver De Fraja eStones, 2004;Stones, 2007).…”

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Determinantes Do Endividamento E Regulação Econômica: Uma Análise Das Firmas Brasileiras De Infraestrutura Reguladas

Neto¹,

Bianconi²,

Guerrero³

et al. 2022

Rev. Foco

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Este artigo tem por objetivo avaliar se firmas que operam em setores regulados apresentam níveis diferentes de endividamento comparativamente com firmas similares que operam em setores não regulados. Ou seja, se um ambiente regulado economicamente de algum modo afeta a decisão de nível de endividamento das firmas. O trabalho traz um conjunto de artigos que apresentam formas sob as quais essa diferença pode ocorrer. Em seguida, é realizada uma análise em painel a partir de informações econômico-financeiras de firmas reguladas e não reguladas brasileiras, tendo por objetivo mensurar essa possível diferença. Os resultados demonstram que, para endividamentos de longo prazo, há diferença entre firmas reguladas e não reguladas, mesmo após a utilização de variáveis de controle recomendadas pela literatura empírica de estrutura de capital.

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“…Our approach differs from De Fraja and Stones () and Stones () where the regulator, rather than the firm, chooses the capital structure of the firm. These papers also assume that the regulator must set p to ensure that the firm never goes bankrupt and shareholders earn their required rate of return.…”

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confidence: 99%

Investment and Capital Structure of Partially Private Regulated Firms

Cambini

Spiegel

2015

Economics Manag Strategy

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We develop a model that examines the capital structure and investment decisions of regulated firms in a setting that incorporates two key institutional features of the public utilities sector in many countries: firms are partially owned by the state and regulators are not necessarily independent. Among other things, we show that regulated firms issue more debt, invest more, and enjoy higher regulated prices when they face more independent regulators, are more privatized, and when regulators are more pro‐firm. Moreover, regulatory independence, higher degree of privatization, and pro‐firm regulatory climate are associated with higher social welfare.

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Risk Sharing, the Cost of Equity and the Optimal Capital Structure of the Regulated Firm

Cited by 11 publications

References 19 publications

Cost Sharing and Bankruptcy Law Orientation

Cost Sharing and Bankruptcy Law Orientation

Determinantes Do Endividamento E Regulação Econômica: Uma Análise Das Firmas Brasileiras De Infraestrutura Reguladas

Investment and Capital Structure of Partially Private Regulated Firms

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