Purpose – The purpose of this paper is to instruct upper level business students on the intricacies of the debt‐equity choice with the emphasis on showing the interrelation of this choice with the plowback‐payout choice. Design/methodology/approach – The paper is designed around a...

The traditional approach to capital expenditure analysis is based on the neoclassical economic paradigm. According to this paradigm, managers are assumed to strive for profit maximization in an effort to maximize the wealth of the firm's stockholders. In their pursuit of this objective, the...

Interviews in South Korea, Taiwan, Singapore, and India indicate net present value (NPV) is not widely employed in making capital investment decisions in these newly industrialized and developing countries. It is not from lack of knowledge about net present value: rather, it is due to (1)...

Purpose: The purpose of this paper is to explore if hedge fund variables (HFVs) are associated with long-run compounded raw returns (CRRs) for seasoned equity offering (SEO) firms for a six-year window around the offering month for firms undergoing SEOs. Design/methodology/approach: The event...

Purpose – The purpose of this paper is to examine the impact of insider ownership decreases on stock returns for firms undergoing seasoned equity offerings (SEOs). Design/methodology/approach – Insider data were gathered for firms undergoing SEOs and this information used to compute the...

Purpose – The traditional discounted cash flows (DCF) valuation procedure used by financial analysts assumes that firms maintain a policy of fixed debt. However, empirical evidence suggests that many firms rebalance their debt. This paper seeks to explore the implication of this discrepancy...

Purpose – The purpose of this study is to examine the impact of interest rates on the size and the maturity choice of a syndicated bank loan. In addition, it attempts to determine the long‐run impact of a syndicated loan on the borrower's capital structure. Design/methodology/approach –...

Purpose – This paper aims to examine the link between financing patterns, information asymmetry and legal traditions in 37 countries during the 1990‐2004 period. Design/methodology/approach – The analysis is based on three theories: the trade‐off theory, pecking order hypothesis and...

Purpose – This paper aims to derive insights about optimal managerial compensation and firm capital structure in unionized firms. Design/methodology/approach – This paper uses applied game theory to address problems of CEO motivation in companies with unionized workforces. Findings –...

Purpose – Capital structure decisions rely on a complex array of theoretical foundations and practical considerations. At the managerial level, it is impractical to base decisions purely on theory. While one can develop a perception of an optimal capital structure, the decision is often...