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The purpose of this paper is to examine the impact of managerial risk exposure on capital structure selection (net debt, or debt minus cash) as well as return on assets, capital expenditures, research and development expenditures and stock price performance.

The paper compares a sample of 123 all‐equity firms to a set of matching levered firms selected on the basis of industry, market cap and market‐to‐book assets. Managerial incentives are measured using the delta and vega of the manager's stock and option holdings.

Net debt levels decline as CEO wealth sensitivity to stock price changes (delta) increases. However, the paper finds no differences between the all‐equity firms and their levered matching firms in terms of return on assets, capital expenditures, R&D expense, or long run stock price performance.

Findings are consistent with the idea that managerial incentives drive net debt decisions even among all‐equity firms. However, given that there are no differences between the sample firms and their matched firms in terms of investment or stock price performance, the effect of managerial risk aversion appears to be confined to financial policy.

The paper uses modern methods for measuring managerial risk exposure to revisit the literature on all‐equity firms, and show that managerial risk exposure affects the net debt decision in these firms.

This paper aims to investigate whether all-equity firms are a heterogeneous group as it relates to agency costs when compared to a matched sample of levered firms and to contribute toward the understanding of the “low leverage” puzzle and the motivations behind such a perplexing phenomenon.

Propensity score matching (PSM) is used to control for endogeneity issues common to this line of research. Because all-equity firms are self-selecting, it is not possible to conduct a true randomized study. PSM attempts to simulate a randomized study by selecting matching observations with similar propensity scores as the all-equity observations.

Agency costs are not the only explanation leading to the implementation of an all-equity capital structure. The motivation of such structure is strongly influenced by free cash flows (FCF) and growth opportunities (GO), whereby firms that have high levels FCF combined with low GO exhibit higher levels of agency costs versus their levered peers, while those that have low levels of FCF and high GO exhibit no significant difference in agency costs.

A better understanding of why a firm chooses such an extreme capital structure can help investors, auditors and potential future creditors in their decision-making process.

Most prior research treats capital structure as an exogenous variable. By applying PSM, not previously used in prior research, a new methodology is used to address the endogeneity issue related to observational studies such as this one. This paper contributes toward further understanding the perplexing “low-leverage” puzzle often discussed in the financial and accounting literature.

This paper aims to seek to find answers to three questions. First, is there any possibility of long-term cointegration between East and Southeast Asian equity markets? If so, how many cointegrating equations are there? Second, what are the short-term causal relationships between equity markets in East and Southeast Asia? Third, what is the East Asia’s most influential equity market toward their Southeast counterparts, and vice versa?

This study uses Johansen's (1988) cointegration method to test long-run relationships among East and Southeast Asian equity markets. With regards to short-run causal relationships, this study uses Granger-causality test as well as the forecast variance decomposition method.

Johansen test proves that there is cointegration between East and Southeast Asian equity markets, but the integration process is not complete. Cointegrating vector also provides evidence that member countries of ASEAN+3 respond differently to external shocks. With regards to short-run causal direction, this study finds that Japan Granger-causes all equity markets in Southeast Asia, while Singapore and Vietnam Granger-cause all equity markets in East Asia. These results imply that Japan is the market with most linkages in Southeast Asia, while Singapore and Vietnam are the markets with most linkages to East Asia. Furthermore, forecast variance decomposition reveals that Japan is the East Asia’s most influential equity markets, while Singapore is the most influential equity market in Southeast Asia. This study suggests that policymakers in East and Southeast Asian countries to synchronize the capital market standards and regulations as well as to reduce the barriers for capital mobility to spur the regional equity market integration.

Increasing integration of East and Southeast Asian capital markets forces policymakers in ASEAN+3 countries to synchronize monetary policies, as it has been found that regionally integrated capital markets reduce the degree of independent monetary policy (Logue et al., 1976). It is therefore important for policymakers in East and Southeast Asian countries to assess the possibility of stock market integration within this region to anticipate the future risks associated with economic integration as well as to build collective regional institutions (Wang, 2004). Click and Plummer (2005) also argued that integrated stock markets is more efficient than nationally segmented equity markets, and the efficiency of Asian capital markets has been questioned in particular after the 1997 Asian financial crises. Yet, the empirical evidence on the extent of financial integration among ASEAN+3 member countries has been limited and inconclusive. This study is therefore an attempt to investigate the recent development of ASEAN+3 equity markets integration.

This study focuses its attention on the existence and the extent of financial integration in East and Southeast Asia region, and it provides evidence that equity market integration in ASEAN+3 is far from complete, and for that reason, there is a need for policymakers in ASEAN+3 member countries to synchronize their standards and regulations. Furthermore, the policymakers in East and Southeast Asia can gain benefit from this study, as it provides the evidence that ASEAN+3 member countries respond differently to policy shocks, which may hinder the development of regional financial integration as well as the policy effectiveness of region-wide authority in ASEAN+3.

This research is different from previous studies, as it puts the regional financial integration within the context of ASEAN+3 frameworks. Unlike previous research that considers East and Southeast Asian countries as an individual entity, this research considers East and Southeast Asia into two different blocks, following Tourk (2004) who documented that negotiation process for ASEAN+3 financial integration is conducted in sub-regional level (ASEAN vs East Asia), rather than national level (country per country basis). Second, this study covers the period after the 1997 Asian financial crisis. As suggested in Wang (2014), that the degree of stock market integration tends to change around the periods marked by financial crises, the updated study on Asian financial integration in the aftermath of 1997 financial crises is important to document the development of regional financial integration.

The problem in alleviating homeowner mortgage distress through refinance is how to achieve meaningful alleviation without prospectively harming the financier. The problem revolves around two parameters from real estate finance – the probability that the distress leads to foreclosure and resulting foreclosure loss severity for the financier if foreclosure does occur. Previous analysis focuses on reducing the probability that homeowner distress leads to foreclosure. By contrast, the purpose of this paper is to focus on reducing foreclosure loss severity.

The study develops a new intuitive formula for foreclosure loss severity to quantify its dependence on transaction costs. The study shows that foreclosure loss severity reduction is feasible by introducing a new refinancing instrument that lowers foreclosure transaction costs and applying property law to derive the structure of the refinancing instrument.

Foreclosure loss severity reduction can subsidize concessions on scheduled payments for homeowners with arbitrarily poor credit without prospective harm to the financier.

Quantification of mortgage distress relief is limited to distressed mortgages described by representative parameter values from various government studies.

For most distressed homeowners, payment and principal reductions could exceed those available from the recent government programs.

Implementation should significantly enlarge the pool of homeowners eligible for mortgage distress relief.

The mortgage refinance is qualitatively different from that available under existing government refinance programs because it is based on an arms-length exchange of property rights that makes market sense regardless of whether the refinancing results in subsequent homeowner default.

Explains that three approaches to valuation under leverage are found in the financial economics literature: weighted average cost of capital (WACC); flow‐to‐equity (FTE) or residual equity income (REI); and adjusted present value (APV). Although both the WACC and the FTE methods have been extensively used in real estate investment analyses, it appears that the APV has received little attention in the real estate literature. This is surprising because the reasons that render the APV preferable to the other two methods exist in most real investment situations. Provides an introduction to the APV method and illustrates it with a numerical example. Discusses potential applications of this method in different real estate investment problems.

This paper examines the effects of management compensation schemes on corporate investment decisions. This is a significant study because it helps to understand such a relationship and to design the optimal management compensation scheme which induces the manager to act towards the goals and best interests of the company. Assuming that compensation schemes consist of flat salary, bonus payment, and stock options, I first examine the effects of alternative compensation schemes on corporate investment decisions under all‐equity financing, then examine the issue in a setting where a firm relies on debt financing. I find that managers tend to underinvest when they have a higher shareholding and a larger profit sharing percentage. This result is independent of the level of debt financing. I also find that the underinvestment problem can be alleviated by increasing financial leverage. These results and findings provide testable hypothesis for future research. I expect a negative relationship between corporate performance and each of compensation scheme of management shareholdings, stock options and profit sharing percentage, but a positive relationship with financial leverage.

This study aims to investigate the extent and nature of corporate governance reporting (CGR) in corporate annual reports of Bangladesh. The aim of the study to test empirically the relationship between corporate governance (CG) and CGR by the listed companies in Bangladesh. The CG examined the proportion of independent directors, board leadership structure, board size, ownership structure and audit committee size.

The study is based on a sample of 86 listed non-financial companies in Dhaka stock exchanges (DSE) from the period of 2015-2017 and all the companies are selected by judgment Sampling. The study has been used as an unweighted relative disclosure index for measuring CGR.

The empirical results indicate that board leadership structure (BLS) is positively associated with the level of CGR. In contrast, the percentage of equity owned by the insiders to all equity of the firm is negatively associated with the level of CGR.

Findings of this study have important implications for regulatory authority, enforcement agencies such as Institute of Cost and Management Accountants of Bangladesh, Institute of Chartered Accountants of Bangladesh, Bangladesh Securities and Exchange Commission, DSE, policymakers, shareholders and others who have an interemaammast in CG.

Finding of the study will be a benchmark for policymakers and implementers in torching the avenues of improvement in raising the level of CG reporting.

The purpose of this paper is to examine the nature of the relationship between business risk and financial leverage. While past theoretical and empirical studies on this topic use similar variables, overall, their findings are inconclusive. In this paper, the author contends this is partially due to inappropriate proxies for business risk that are commonly used in these research papers. To correct for this misspecification, this paper proposes an alternative proxy for business risk that is isolated from the effects of financial leverage.

Past research on the relationship between business risk and financial leverage uses some variations in a firm’s operating cash flow as a proxy for business risk. This proxy cannot solely reflect business risk and may very well be affected by the level of financial leverage, especially for financially distressed firms. This paper proposes an alternative proxy for business risk that is isolated from the effects of financial leverage. This proxy is the cost of capital of an all-equity firm. The theoretical model developed in this paper is based on deriving the optimum level of debt as a function of business risk in the context of the Modigliani and Miller Proposition II model.

The findings show a positive linkage between business risk and financial leverage. This relationship is robust to the various forms the cost of financial distress function may take.

The mixed findings in past research papers regarding the relationship between business risk and financial leverage are mainly due to “inappropriate” measures of business risk that do not only reflect one firm attribute and are contaminated with other factors mainly financial leverage. As such, since the variable of interest is misspecified, the outcome of these studies cannot be credible. This paper attempts to correct for such misspecification by proposing a proxy that only reflects business risk. In addition, the proposed model is based on the widely acceptable Modigliani and Miller static theory of capital structure.

The purpose of this paper is to identify the capital structure determinants through an analysis of 74 All-Equity REITs listed in the US market from 2005 to 2014. Furthermore, the paper aims at understanding the impact of the financial economic crisis (FEC) among the identified explanatory variables.

A fixed effect panel regression model is performed based on Trade-off Theory (TOT) and Pecking Order Theory as a starting point to provide expectations on the relationships incurring among the identified variables.

First, while tangibility of assets and crisis evidenced a positive relationship with REITs’ financial leverage, operating risk and growth opportunities variables displayed a negative relationship. Meanwhile, size and profitability did not appear to influence the capital structure. Second, it appears that the positive effects of tangibility of assets and profitability variables on US REITs’ capital structure increased as a consequence of the FEC. Operating risk and growth opportunities variables slightly increased their negative relationship with US REITs’ capital structure after the FEC. The TOT prevails when explaining the economic reality underlying US REITs.

The paper contributes to the understanding of US REITs’ financing decisions within the US market. The FEC also had a substantial indirect impact on the financial leverage determinants of US REITs, the latter being nowadays more oriented to maintaining a flexible capital structure.

The paper provides a comprehensive view of the medium-term effect of the FEC on US REITs’ capital structure.

The question whether the use of an asset will be terminated before its physical life expires is of interest to financial managers. In other words, purchasing an asset does not necessitate its use until the end of its physical life. An asset might be terminated because it is inefficient to continue operating, or because it can be replaced. Thus, in a single cycle problem, the objective is to determine how long an asset should be employed before termination. In a replacement problem, the focus is on determining how long the asset should be held before being replaced with a similar one.