Financial Management articles from June 1992

Financial Management archives from June 1992

The opportunity cost of using excess capacity. (Issues in Corporate Investments)
June 22, 1992... A common problem in capital budgeting arises when a new project proposal calls for the use of existing, but currently idle, equipment or facilities. The issue is whether there is any opportunity cost to diverting these facilities to the new...

Effects of depreciation and corporate taxes on asset life under debt-equity financing. (Issues in Corporate Investments)
June 22, 1992... This paper examines the effects of depreciation and corporate taxes on the optimal life of an asset financed by a combination of debt and equity. In a single-cycle problem, the optimal life literature purports to determine how long an asset...

The information content of plant closing announcements: evidence from financial profiles and the stock price reaction. (Issues in Corporate Investments)
June 22, 1992... * A plant closing announcement provides information not just for the plant being closed but also for other operations and the firm as a whole. Examination of financial profiles for firms announcing plant closings indicates that closings are...

Minority buyouts and ownership characteristics: evidence from the Toronto Stock Exchange. (Issues in Corporate Investments)
June 22, 1992... * In contrast to the relatively wide ownership of most publicly listed companies on U.S. stock exchanges, most companies listed on many non-U.S. markets, such as the Toronto Stock Exchange (TSE), are closely controlled.(1) The concentration of...

Pricing new-issue and seasoned preferred stocks: a comparison of valuation models. (Practical Issues in Valuations)
June 22, 1992... Over $1 billion in preferred stock is traded on the New York Stock Exchange each month -- a volume sufficient to make an investigation of alternative valuation techniques meaningful to both current and prospective investors evaluating opportune...

Estimating shareholder risk premia using analysts' growth forecasts. (Practical Issues in Valuations)
June 22, 1992... One of the most widely used concepts in finance is that shareholders require a risk premium over bond yields to bear the additional risks of equity investments. While models such as the two-parameter capital asset pricing model (CAPM) or...

Bond covenants and forgone opportunities: the case of Burlington Northern Railroad Company.
June 22, 1992... * Late in 1987, a federal court approved a settlement between Burlington Northern Railroad Company (BNRR) and holders of two series of bonds issued by Northern Pacific Railroad, one of the companies merged to form BNRR. The settlement...

Revisiting the high-yield bond market.
June 22, 1992... * The yields on various fixed-income securities are determined by the market's assessment of three major risks in holding a given issue: (i) its sensitivity to changes in interest rates, (ii) its illiquidity, and (iii) its probability of...