Financial Management articles from September 1993

Financial Management archives from September 1993

On financial ethics. (includes appendix) (FM Forum) (Panel Discussion)
September 22, 1993... more formal regulatory system to do and it can adapt to changing circumstances. The drawback to external regulations being that they are not generally seen to have the same moral force as self-imposed standards and so they can too readily become...

Managing financial distress and valuing distressed securities: a survey and a research agenda. (Financial Distress Special Issue)
September 22, 1993... in Miller and Modigliani |93~. The typical boundary condition used in these models to denote bankruptcy is that of strict absolute priority rule triggered when firm value falls below the promised principal payment.(15) The entire firm value...

Controlling financial distress costs in leveraged buyouts with financial innovations. (Financial Distress Special Issue)
September 22, 1993... This study investigates innovative methods used to reduce the cost of financial distress in leveraged buyouts. These methods include strip financing, where debt and equity are shared by the same investors, the use of LBO specialist sponsors, who...

Accounting measures of corporate liquidity, leverage, and costs of financial distress. (Financial Distress Special Issue)
September 22, 1993... A general view of financial distress is that it results from a mismatch between the currently available liquid assets of a firm and its current obligations under its "hard" financial contracts. Mechanisms for dealing with financial distress...

Absolute priority rule violations and risk incentives for financially distressed firms. (includes appendices) (Financial Distress Special Issue)
September 22, 1993... E(P) = |e.sup.rT~VN(|d.sub.1~) - BN(|d.sub.2~), (A3) The present value of E(P), hence the value of equity, is given by: S = VN(|d.sub.1~) - |e.sup.-rT~BN(|d.sub.2~). (A4) This, of course, is the familiar call option formula derived by Black...

Does default risk in coupons affect the valuation of corporate bonds?: a contingent claims model. (Financial Distress Special Issue)
September 22, 1993... 6. S. Brown and P. Dybvig, "The Empirical Implications of the Cox, Ingersoll, Ross Theory of the Term Structure of Interest," Journal of Finance (July 1986), pp. 617-632. 7. J.C. Cox, J.E. Ingersoll, Jr., and S.A. Ross, "Duration and the...

Marketability and default influences on the yield premia of speculative-grade debt. (includes appendices) (Financial Distress Special Issue)
September 22, 1993... Following several years of severe price volatility, market uncertainty and several well-publicized controversies and improprieties, the number of new issue high-yield bonds virtually disappeared by 1990. However, declining interest rates during...

Recognizing financial distress patterns using a neural network tool. (includes appendix) (Financial Distress Special Issue)
September 22, 1993... The traditional approach and present standard for predicting financial distress uses multiple discriminant analysis (MDA) to weight the relative value of information provided by a combination of financial ratios.(1) But MDA has been sharply...

Market reaction to bond downgradings followed by Chapter 11 filings. (filing under bankruptcy law) (Financial Distress Special Issue)
September 22, 1993... What is the impact of a firm's bond downgrading on its stock price? When bond downgradings occur, can the stock market distinguish between those companies that later file for Chapter 11 and those that do not? If the stock market can indeed...

Troubled savings and loan institutions: turnaround strategies under insolvency. (includes appnedix) (Financial Distress Special Issue)
September 22, 1993... Throughout the 1980s and into the 1990s, the thrift industry (savings and loans (S&Ls) and mutual savings banks) was plagued by severe problems that led to massive numbers of insolvencies which bankrupted the government fund established to insure...

Response of distressed firms to incentives: thrift institution performance under the FSLIC Management Consignment Program. (Federal Savings and Loan Insurance Corporation)(includes appndices) (Financial Distress Special Issue)
September 22, 1993... Much of the finance literature on deposit insurance in recent years has focused on the moral hazard problems that result from federal deposit insurance and the agency problems that result when insolvent institutions are allowed to operate. For...

Stakeholder losses in corporate restructuring: evidence from four cases in the North American steel industry. (Case Study)
September 22, 1993... 9. P.F. Drucker, "Corporate Takeovers -- What is to Be Done?," The Public Interest (Winter 1986), pp. 3-24. 10. K. Engelmann and B. Cornell, "Measuring Costs of Corporate Litigation: 5 Case Studies," Journal of Legal Studies (Vol. 25, No. 2,...

Real options and interactions with financial flexibility. (Topics in Real Options and Applications)
September 22, 1993... entrepreneurs). Equityholders, of course, have an option to acquire the firm (project) value V -- which in the meantime is "owned" by the debtholders (here, the venture capitalists) -- by paying back the debt (with imputed interest) as exercise...

A real options and game-theoretic approach to corporate investment strategy under competition. (includes appendices) (Topics in Real Options and Applications)
September 22, 1993... An investment strategy encompasses a sequence of tactical investment projects, of which several may yield a low return when considered in isolation. Often the value of such an investment consists of the option to invest in the future growth of...

Creating value by spawning investment opportunities. (Topics in Real Options and Applications)
September 22, 1993... A central managerial concern is how to generate a "proper mix" of investment projects. Funds are needed for the strategic search for new investment opportunities as well as for the maintenance of operational business lines. Any investment,...

Case studies on real options. (Topics in Real Options and Applications)
September 22, 1993... The introduction of option pricing theory (OPT) has been well received by practitioners, who have struggled with discounted cash flow (DCF) analysis for many years.(1) The ability of option pricing theory to quantify flexibility in strategic...

Corporate finance. (Financial Management Collection)
September 22, 1993... Should Companies Really Attempt to Maximize Shareholder Value? The following is a provocative exchange between prominent corporate strategist, C.K. Prahalad, and shareholder value advocate, Bennett Stewart. Also participating in this discussion...

Derivatives. (Financial Management Collection)
September 22, 1993... MISUNDERSTOOD DERIVATIVES: THE CAUSES OF INFORMATIONAL FAILURE AND THE PROMISE OF REGULATORY INCREMENTALISM Excerpted and abstracted with permission of The Yale law Company and Fred B. Rothman & Company. The underlying work originally appeared...

Institutions. (Financial Management Collection)
September 22, 1993... Deposit Insurance, Risk, and Market Power in Banking Abstracted with permission from The American Economic Review. This article appeared in Volume 80, Number 5, December 1990, pp. 1183-1200. In the past ten years, the thrift industry has been...

Investments. (Financial Management Collection)
September 22, 1993... Calls of Warrants: Timing and Market Reaction Excerpted with permission from The Journal of Finance, 44 West Fourth Street, Suite 9-190, New York, NY 10012. This article originally appeared in Volume 48, Number 1, June 1993, pg. 695. This...

Financial education. (Financial Management Collection )
September 22, 1993... Teaching Diversity: Business Schools Search for Model Approaches Abstracted with permission from Newsline, AACSB, 605 Old Ballas Road, Suite 220, St. Louis, MO 63141-7077. This article originally appeared in Volume 23, Number 1, Fall 1992,...