Ecos de Economía, Vol. 23, No. 49 (2019)

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https://hdl.handle.net/10784/16029

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Examinando Ecos de Economía, Vol. 23, No. 49 (2019) por Materia "Deuda"

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    Ítem
    Credit Risk, Cost of Capital and Excessive Financial Leverage
    (Universidad EAFIT, 2020-02-28) Gutiérrez Betancur, Juan Carlos; Mejía Kambourova, David; Gómez Cardeño, Laura; Universidad EAFIT
    Conventionally, business valuation methods do not usually incorporate explicitly the effects that the probable bankruptcy costs of the firm could have on the cost of capital. Doing this introduces a stress test in the estimation of the discount rate, which can be very relevant for the fair valuation of excessively leveraged companies traded on the stock market. In this sense, the purpose of this article is to demonstrate the resulting financial vulnerability for this type of firms by explicitly adjusting the cost of capital for bankruptcy risk, and highlighting its implications for the stock market and bank debt market, based on a comparative analysis between three alternative methods of calculating the weighted average cost of capital.
  • Miniatura
    Ítem
    Stock price reactions to capital structure changes in Chilean firms: Examining the effects of ownership structure, growth opportunities and leverage
    (Universidad EAFIT, 2020-02-28) Muñoz Mendoza, Jorge A.; Sepúlveda Yelpo, Sandra M.; Veloso Ramos, Carmen L.; Universidad de Concepción
    We analyzed the effects of ownership structure, capital structure and growth opportunities on stock price reactions when companies issued debt or equity. Our results, based on event study methodology and IV regressions from a sample of 70 Chilean firms, indicate that controlling shareholder ownership has a negative effect on stock price reactions for debt issuances and a positive effect for equity issuance. These results indicate that debt issuances are a substitute for majority shareholder monitoring, and that equity issuances are associated with superior corporate performance. Equity issuances are a means for expropriating wealth from non-controlling shareholders. Debt and growth opportunities have a non-linear effect.