Does a catastrophe bond issue increase the insurance firm value to shareholders? By issuing such bonds, insurance companies that are exposed to weather claims, can share their risk with investors, managing the corporate risk. The academic literature argues that hedging activities can increase a...

Insurance securitization has long been hailed as an important tool to increase the underwriting capacity for companies exposed to catastrophe-related risks. However, global volumes of insurance securitization have remained surprisingly low to date which raises questions over its benefits. In...

We examine the effect of stock liquidity on the choice between debt and equity financing. Using three quasi-natural experiments, we show that increased stock liquidity increases firms' propensity to finance using debt. In addition, we document that liquidity reduces the cost of debt finance....

This paper studies a firmś optimal capital structure in an environment, where the firmś stock price serves as a public signal for its credit worthiness. In equilibrium, equity investors choose how much information to acquire privately, which induces a positive relation between the amount of...

Modigliani and Miller present an equity-quantity shifting equilibrating process to achieve an optimal firm value in the presence of corporate taxes. However, in the era in which they derived their various propositions regarding the relation between a firm’s value and its capital structure,...

The purpose of this study is to investigate whether there is any statistically significant relationship between capital structure and stock return for the selected firms of pharmaceutical and chemical sector which are listed in Dhaka Stock Exchange of Bangladesh. To examine the relationship this...

Though it has recently become a contemporary financial management tool, stock repurchase can be so dangerous that it may raise concerns about insider trading and manipulative transactions. In fact, such concerns underlie the most important critique of stock repurchase and justify its...

This paper examines the relationship between capital structure and shareholder returns in the UK between 1980 and 2008. Expanding on Modigliani and Miller's (1958) Proposition 2, returns are estimated using the asset pricing models of CAPM, Fama and French and of Carhart. The analysis shows that...

Asymmetric volatility in equity markets has been widely documented in finance, where two competing explanations, as considered in Bekaert and Wu (2000), are the financial leverage and the volatility feedback hypothesis. We explicitly test for the role of both hypotheses in explaining extreme...