Details

Capital Structure Decisions


Capital Structure Decisions

Evaluating Risk and Uncertainty
Wiley Corporate F&A 1. Aufl.

von: Yamini Agarwal

90,99 €

Verlag: Wiley
Format: PDF
Veröffentl.: 29.03.2013
ISBN/EAN: 9781118203149
Sprache: englisch
Anzahl Seiten: 224

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Beschreibungen

<b>Inside the risk management and corporate governance issues behind capital structure decisions</b> <p>Practical ways of determining capital structures have always been mysterious and riddled with risks and uncertainties. Dynamic paradigm shifts and the multi-dimensional operations of firms further complicate the situation. Financial leaders are under constant pressure to outdo their competitors, but how to do so is not always clear. <i>Capital Structure Decisions</i> offers an introduction to corporate finance, and provides valuable insights into the decision-making processes that face the CEOs and CFOs of organizations in dynamic multi-objective environments.</p> <p>Exploring the various models and techniques used to understand the capital structure of an organization, as well as the products and means available for financing these structures, the book covers how to develop a goal programming model to enable organization leaders to make better capital structure decisions. Incorporating international case studies to explain various financial models and to illustrate ways that capital structure choices determine their success, <i>Capital Structure Decisions</i> looks at existing models and the development of a new goal-programming model for capital structures that is capable of handling multiple objectives, with an emphasis throughout on mitigating risk.</p> <ul> <li>Helps financial leaders understand corporate finance and the decision-making processes involved in understanding and developing capital structure</li> <li>Includes case studies from around the world that explain key financial models</li> <li>Emphasizes ways to minimize risk when it comes to working with capital structures</li> </ul> <p>There are a number of criteria that financial leaders need to consider before making any major capital investment decision. <i>Capital Structure Decisions</i> analyzes the various risk management and corporate governance issues to be considered by any diligent CEO/CFO before approving a project.</p>
<p>Preface xi</p> <p>Acknowledgments xv</p> <p><b>Chapter 1: The CFO’s Role in the New Global Economy 1</b></p> <p>The Decision-Making Process 2</p> <p>Goals of a CFO’s Team 5</p> <p>A CFO’s Constraints 6</p> <p>Recent Issues in Capital Structure Decision Making 7</p> <p>Summary 9</p> <p><b>Chapter 2: Time Dimensions of Capital Structure Decisions 11</b></p> <p>Sources of Funds 12</p> <p>Cost of Funds 14</p> <p>Cost of Loan Funds or Bonds 17</p> <p>Summary 20</p> <p><b>Chapter 3: Predicting and Evaluating a Firm’s Performance 21</b></p> <p>Income Statement 34</p> <p>Balance Sheet 35</p> <p>Cash Flow Statement 36</p> <p>Funds Flow Statement 36</p> <p>Significant Accounting Policies and Notes to Account 36</p> <p>Ratio Analysis 37</p> <p>Predicting Bankruptcy 41</p> <p>Summary 43</p> <p><b>Chapter 4: Maximising Value with Capital Structure Decisions 45</b></p> <p>Value-Based Management Framework 46</p> <p>Valuations 46</p> <p>Variations in Cost of Capital 49</p> <p>Formula-Based Approaches to Valuation 50</p> <p>Summary 56</p> <p><b>Chapter 5: Risk Dimensions to Capital Choices 57</b></p> <p>Capital Sources 60</p> <p>Types of Risk and Their Measures 61</p> <p>Capital Choices and Risk Management 62</p> <p>Requirement for Equity Capital and Risk 64</p> <p>Framework for Risk Management 65</p> <p>Summary 66</p> <p><b>Chapter 6: Role of Off–Balance Sheet Capital 67</b></p> <p>Fixed-Asset Financing 68</p> <p>Working Capital Financing Options 71</p> <p>Effects on the Balance Sheet 82</p> <p>Summary 84</p> <p><b>Chapter 7: Innovations in Capital Structure 85</b></p> <p>Forms of Financing 86</p> <p>Financial Innovations 87</p> <p>Summary 94</p> <p><b>Chapter 8: Global Markets and Efficiencies in Capital Structure Decisions 95</b></p> <p>Reasons for International Financing 96</p> <p>International Bond Market 98</p> <p>International Equity Market 99</p> <p>Bank Loans 99</p> <p>Financial Structure for a Global Firm 99</p> <p>Doing Business in Select Countries: Political, Legal, Social, and Financial Aspects 100</p> <p>Summary 125</p> <p><b>Chapter 9: Theoretical Frameworks for Capital Structure Decision Making 127</b></p> <p>Review and Synthesis of Theoretical Frameworks 127</p> <p>Capital Structure Puzzles 131</p> <p>Summary 138</p> <p><b>Chapter 10: Strategic Determinants of Sources of Capital 139</b></p> <p>Strategic Considerations 141</p> <p>Mission and Vision 142</p> <p>Strategic Targets and Objectives 144</p> <p>Devising Strategic Capital 147</p> <p>Motives for Issuing Equity 151</p> <p>Motives for Issuing Debt 154</p> <p>Motives for Issuing Foreign Debt 156</p> <p>Motives for Issuing Convertibles 157</p> <p>Factors Motivating Debt Maturities 158</p> <p>Summary 160</p> <p><b>Chapter 11: Economy-Driven Capital Structure Practises 161</b></p> <p>Understanding Capital Structure Practises 161</p> <p>A Firm’s Access to Capital and Business 165</p> <p>Capital Structure Decisions in Emerging Economies 168</p> <p>Financial Structures Linked to Global Development Indicators 172</p> <p>Present Global Markets and Capital Choices 175</p> <p>Summary 178</p> <p><b>Chapter 12: The Role of a Decision Maker in Capital Structure Decisions 179</b></p> <p>Revisiting the Decision-Making Process 181</p> <p>The Goals of a Decision Maker 183</p> <p>A Decision Maker’s Characteristics and Attributes Matter 185</p> <p>Summary 190</p> <p><b>Chapter 13: Behavioural Evidence of a CFO’s Decision-Making Process 193</b></p> <p>The CFO’s Role in Indian Industry 194</p> <p>CFOs’ Working Attributes for Capital Structure Decisions in India 197</p> <p>CFOs’ Operational Aspects in the United States 200</p> <p>Summary 203</p> <p><b>Chapter 14: A Multiple-Objective Framework for Capital Structure Decisions: A Goal-Programming Approach to Decision Making 205</b></p> <p>Evaluation of Mathematical Programming Techniques 206</p> <p>Evaluation Techniques under Uncertainty 210</p> <p>Model Specifications for Capital Structure Decision Making 214</p> <p>Application of Goal-Programming Models for Capital Structure Decisions 216</p> <p>Data Compilation for Model Development 217</p> <p>Capital Structure Practises in India 219</p> <p>Goal-Programming Model for Capital Structure Decisions Using Accounting Proxies 226</p> <p>Case 1: α1 Co. (Alpha One Company) in the Agriculture Industry 227</p> <p>Summary 236</p> <p>References 237</p> <p>About the Author 245</p> <p>Index 247</p>
<p><b>Yamini Agarwal</b> is currently Vice Chairperson and Professor of Finance at the Indian Institute of Finance. She also edits the refereed quarterly journal <i>Finance India</i>, as its Associate Editor.</p> She has completed her doctorate in Finance from The Indian Institute of Technology (IIT), Delhi on Capital Structure Decisions under Multiple Objectives.  She has also successfully completed a Strategic Business Finance program for Senior Executives as a sponsored and nominated candidate of SIDA (Swedish International Development Authority) in Sweden and Malaysia.
<p>Praise for <i>Capital Structure Decisions</i></p> <p>"Dr. Agarwal gives a thoroughly practical guide to capital structure that is also grounded in modern financial research and analysis. The parts of the book that take the perspective of a less developed capital market, India, are an excellent complement to the treatment of more standard issues."<br /> <b>—Ian Cooper, Professor of Finance, London Business School, UK</b></p> <p>"This book provides an interesting and insightful blend of theoretical and practical issues confronting capital structure decisions. I especially like its emphasis on the important role of CFOs in such decisions; an emphasis that is both unique and refreshing. Anyone interested in capital structure decisions will find reading this book to be time well spent."<br /> <b>—Lawrence A. Gordon, PhD, Ernst & Young Alumni Professor of Managerial Accounting and Information Assurance and Affiliate Professor for Advanced Computer Studies, Robert H. Smith School of Business, University of Maryland, USA</b></p> <p>"This book discusses the importance of balancing various, often conflicting goals of several stakeholders of a firm. The typical decision maker charged with capital structure decisions—the CFO—has to optimally weigh all the differing goals to run the firm smoothly and successfully. This treatise is extremely well written with explanations of all the accounting, financing, risk taking, and other relevant goals that the CFO faces. I applaud the author for writing this book with immense clarity and great rigor. It is a must-read book for all practitioners, students, and scholars alike."<br /> <b>—Kashi R. Balachandran, Profesor Emeritus, Stern School of Business, New York University, USA</b></p> <p>"Dr. Yamini Agarwal has taken a much-needed holistic approach to analyzing the decision making by CFOs regarding a firm's capital structure. In addition, she has incorporated some of the opaque aspects of capital structure, such as off-balance sheet financing, that have important risk-return implications. She does an excellent job of blending theory and global practices. This book will be most beneficial for students of finance and also for senior executives responsible for financial decision making."<br /> <b>—Reena Aggarwal, Robert E. McDonough Professor of Business Administration and Professor of Finance and Director, Center for Financial Markets and Policy, McDonough School of Business, Georgetown University, USA</b></p> <p>"This book gives an excellent summary on many different aspects that have an impact on capital structure decisions. I am very pleased that Professor Agarwal also includes important parts of capital structure decisions like the international aspects of this important management area and the complicated issue of bounded rationality that certainly exists in financial markets. Altogether, the wide range of angles from a research <i>and</i> a real-world perspective makes this modern book worthwhile reading, both for advanced students and practitioners."<br /> <b>—Hubert Fromlet, Professor of International Economics, Linnaeus University, Kalmar and Växjö, Sweden</b></p>

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