Financial Management articles from June 1994

Financial Management archives from June 1994

The cash flow/investment relationship: evidence from U.S. manufacturing firms. (includes appendix)
June 22, 1994... Substantial empirical evidence documents the strong influence of cash flow on some firms' investment spending.(1) This well-documented relationship between cash flow and investment spending (after controlling for the cost of capital) is...

Bank debt reduction announcements and negative signaling.
June 22, 1994... Bankers are parties to information about a firm's financial condition through their special relationship as lenders. This premise is the basis for the predictions of bank debt signaling models, which posit that bank debt issuance announcements...

Bankruptcy costs and the financial leasing decision.
June 22, 1994... This paper re-examines the lease/borrow decision, giving explicit recognition to the role bankruptcy costs play and to the relative transactions costs of leasing and borrowing. Our focus is on noncancellable, long-term financial leases because...

Currency swaps, financial arbitrage, and default risk. (includes appendix)
June 22, 1994... 17 Another alternative to swap financing may be issuing foreign securities. The distinguishing aspect is that swaps are governed by contract law instead of securities law. This difference in legal treatment can have significant default...

Default risk, firm characteristics, and the valuation of variable-rate debt instruments.
June 22, 1994... The high and volatile inflation rates in the 70s and early 80s gave rise to the creation of new debt securities that carry variable coupon rates. The coupon rates of these "variable-rate" or "floating-rate" debt instruments vary over time and...

What every CFO should know about scientific progress in financial economics: what is known and what remains to be resolved. (chief financial officer.)
June 22, 1994... Editor's Note: Contemporary Issues is a new section created to deal with recent developments and current thinking in finance. Potential topics for this section include (but are not limited to) discussions of recent significant changes in tax law...

The emerging market for trade claims of bankrupt firms.
June 22, 1994... A small but growing market has developed for exchanging claims against debtors seeking relief under Chapter 11 of the U.S. Bankruptcy Code. This market provides trade claimants an alternative to forced participation in the reorganization, thereby...

Do high-yield bonds have an equity component?
June 22, 1994... A controversy has arisen concerning the implicit equity component of high-yield bonds. On the one hand, Reilly (1994) reports that investment houses regard the securities as "low-quality credits that have characteristics of common stocks." Shane...