Corporate Finance and Capital Structure: A Theoretical Introduction

ISBN-13: 9780367860066 / Angielski / Miękka / 2020 / 98 str.

Kentaro Asai

Opis

This book discusses several key theories of corporate capital structure to answer how funding structure shapes an institution’s value. The author shows how various microeconomic frameworks, such as price and game theories, principal-agent model, and mechanism design, can be applied to solve the optimal capital structure of a firm.

Spis treści

1. Introduction

1.1 What This Book Is About

1.2 Chapter Overview

2. Capital Structure Choice in a Frictionless World

2.1 Frictionless Capital Market

2.2 Additivity and Uniqueness of Security Valuation

2.3 Neutrality of Capital Structure

2.4 Discussion

3. Trade-Off Theory

3.1 Criticism Against Modigliani and Miller

3.2 Tax Benefit of Debt and Bankruptcy Costs

3.3 Empirical Evidence

3.4 Discussion

4. Agency Theory

4.1 Overview

4.2 Safe Debt Can Mitigate Agency Problem

4.3 Risky Debt Can Aggravate Agency Problem

4.4 Debt Overhang and Risk Shifting

4.5 Discussion

5. Security Design

5.1 Overview

5.2 Optimal Risk Sharing with Moral Hazard

5.3 Financial Contract Under Limited Liability

5.4 Financial Contract Under Costly State Verification

5.5 Optimal Allocation of Control Rights

5.6 Discussion

6. Asymmetric Information

6.1 Overview

6.2 Underpricing in IPO

6.3 Signalling Through Retained Ownership

6.4 Signalling Through Debt

6.5 Pecking-Order Versus Trade-Off Theory

6.6 Discussion

7. Continuous-Time Model

7.1 Overview

7.2 Derivative Valuation Model

7.3 Capital Structure Irrelevance Revisited

7.4 Derivative Valuation Under Stationary Case

7.5 Trade-Off Theory Revisited

7.6 Discussion

8. Capital Structure of a Bank

8.1 Two Roles of a Bank

8.2 Bank Run and Deposit Insurance

8.3 Unintended Consequence of Deposit Insurance

8.4 Capital Regulation

8.5 Ongoing Debate on Capital Regulation

8.6 Discussion

Index

O autorze

Kentaro Asai joined Australian National University in 2016 as an assistant professor in the College of Business and Economics. He earned his PhD, MA, and BA with Honors in economics from the University of Chicago. He has published internationally in scholarly journals and policy reports in economics and finance. He is also a former security analyst at Goldman Sachs.