Capital Structure and Corporate Financing Decisions Theory, Evidence, and Practice

by Baker, H. Kent; Martin, Gerald S.

• ISBN13: 9780470569528
• ISBN10: 0470569522
• Edition: 1st
• Format: Hardcover
• Copyright: 2011-05-03
• Publisher: Wiley

Summary

A comprehensive guide to making better capital structure and corporate financing decisions in today's dynamic business environmentGiven the dramatic changes that have recently occurred in the economy, the topic of capital structure and corporate financing decisions is critically important. The fact is that firms need to constantly revisit their portfolio of debt, equity, and hybrid securities to finance assets, operations, and future growth.Capital Structure and Corporate Financing Decisions provides an in-depth examination of critical capital structure topics, including discussions of basic capital structure components, key theories and practices, and practical application in an increasingly complex corporate world. Throughout, the book emphasizes how a sound capital structure simultaneously minimizes the firm's cost of capital and maximizes the value to shareholders. Offers a strategic focus that allows you to understand how financing decisions relates to a firm's overall corporate policy Consists of contributed chapters from both academics and experienced professionals, offering a variety of perspectives and a rich interplay of ideas Contains information from survey research describing actual financial practices of firmsThis valuable resource takes a practical approach to capital structure by discussing why various theories make sense and how firms use them to solve problems and create wealth. In the wake of the recent financial crisis, the insights found here are essential to excelling in today's volatile business environment.

Author Biography

H. KENT BAKER, PhD, CFA, CMA, is University Professor of Finance and Kogod Research Professor at the Kogod School of Business at American University, Washington, D.C. He has published extensively in leading academic and professional finance journals including the Journal of Finance, Journal of Financial and Quantitative Analysis, Financial Management, Financial Analysts Journal, and Journal of Portfolio Management. Recognized as one of the most prolific authors in finance during the past fifty years, Professor Baker has consulting and training experience with more than 100 organizations and has been listed in fifteen biographies.

GERALD S. MARTIN, PhD, is an Associate Professor of Finance at the Kogod School of Business at American University, Washington, D.C. He has published in top scholarly journals, including the Journal of Financial Economics and Journal of Financial and Quantitative Analysis. Before embarking on his academic career, Professor Martin spent seventeen years in the private sector as president and CEO of TMI Aircraft Finance/TMI Leasing, LLC, financing aircraft and aviation products worldwide for Textron Financial Corporation, as well as in marketing and research at Bell Helicopter Textron Inc.

Table of Contents

Acknowledgments	p. ix
Capital Structure: An Overview	p. 1
The Elements of Capital Structure	p. 15
Factors Affecting Capital Structure Decisions	p. 17
Capital Structure and Corporate Strategy	p. 41
Capital Structure and Firm Risk	p. 59
Capital Structure and Returns	p. 75
Capital Structure and Compensation	p. 93
Worldwide Patterns in Capital Structure	p. 111
Capital Structure Choice	p. 127
Capital Structure Theories and Empirical Tests: An Overview	p. 129
Capital Structure Irrelevance: The Modigliani-Miller Model	p. 151
Trade-Off, Pecking Order, Signaling, and Market Timing Models	p. l71
Estimating Capital Costs: Practical Implementation of Theory's Insights	p. 191
Economic, Regulatory, and Industry Effects on Capital Structure	p. 211
Survey Evidence on Financing Decisions and Cost of Capital	p. 229
Survey Evidence on Capital Structure: Non-U.S. Evidence	p. 249
Raising Capital	p. 261
The Roles of Financial Intermediaries in Raising Capital	p. 263
Bank Relationships and Collateralization	p. 281
Rating Agencies and Credit Insurance	p. 299
Secured Financing	p. 319
Sale and Leasebacks	p. 335
Special Topics	p. 351
Financial Distress and Bankruptcy	p. 353
Fiduciary Responsibility and Financial Distress	p. 371
The Lease versus Buy Decision	p. 387
Private Investment in Public Equity	p. 401
Financing Corporate Mergers and Acquisitions	p. 419
Answers to Chapter Discussion Questions	p. 445
Index	p. 475
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