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This study proposes an alternative perspective on why firms issue convertible debt, to supplement the largely theoretical motives identified in the existing literature. It hypothesises that the separate presentation of convertible debt into its equity and liability components has economic consequences and advantage that explain why firms issue convertible over non-convertible debt, consistent with the debt covenant hypothesis. The purpose of this paper is to address the proposed perspective and hypothesis.

Data on convertible debt, gearing (debt assets and debt equity), debt issuance and retirement, etc. were collected for a sample of 1,104 firms listed on Bursa Malaysia. Regression analyses were then used to assess the hypotheses on how gearing affects the use of convertible debt and the impacts of its use on changes in gearing over the financing cycle.

Firms with higher gearing, and possibly those close to violating debt covenants, are more likely to issue convertible than non-convertible debt. In addition, the use of convertible rather than non-convertible debt both reduces the increase in gearing when debts are issued and leads to a larger decrease in gearing during debt retirements via conversion.

These effects on gearing provide firms with additional financial flexibility and enhance firms' capacity to borrow more from other sources, a lower-debt advantage.

This study demonstrates the informational role of financial reporting in addressing the stewardship emphasis, as part of the decision usefulness objective of financial reporting in the Conceptual Framework for Financial Reporting.

The aim of the paper is threefold: to provide an overview of gearing in the Australian real estate investment market; formally examine the relationship between property returns, risk and gearing; and provide some guidance in evaluating “optimal” gearing levels for real estate investment.

A mathematical modelling framework is presented for evaluating the relationship between investment returns, risk and gearing levels.

The study highlights that risk rises with rising gearing levels and that risk‐adjusted returns fall with rising gearing. Furthermore, it is shown that the gearing‐risk relationship is influenced not only by the cost of debt structure but also the interdependency between ungeared returns and interest rates.

The study suggests that current gearing levels from Australian listed property trusts and unlisted wholesale property funds are relatively conservative. This implies that current gearing could be increased, in particular for wholesale funds, without taking on substantially more risk whilst enhancing returns.

The paper is of value to industry and academia as it offers an extended framework for evaluating the relationship between risk and gearing. In particular, the framework provides insight for gauging gearing levels when constructing real estate investment strategies.

Importantly, the paper shows that the interdependency between ungeared returns and interest rates significantly impacts the relationship between risk and gearing.

The purpose of this study is to investigate the incidence of target gearing behaviour in firms as well as the drivers of such behaviour.

The paper employs a triangulation approach across three methodological phases: a questionnaire survey, logistic regression modelling of firm data, and interviews with finance directors. The results are then discussed under the key themes of gearing optimality, valuation issues, external drivers, the finance life‐cycle, the impact of risk, and the relationship between gearing and corporate strategy.

The results reveal that the majority of firms engage in targeting, though targets are subject to fairly frequent revision as both external and internal drivers evolve. Important external drivers include macroeconomic variables and analysts' views, whereas important internal drivers include income gearing and profitability.

Given the range and variety of drivers, target gearing evidently represents a complex strategic decision for finance directors. The paper provides a benchmark perspective for finance directors when determining their firm's gearing strategy.

The innovation of the paper is the study of target gearing across three methods, the results of which are then triangulated to provide a deeper understanding of both the quantifiable and qualitative drivers of gearing. This provides a far broader insight into the real‐world determination of gearing strategy than a conventional empirical approach.

This study aims to examine the economic consequences of, and managerial behaviour in response to, the introduction of IFRS 16 Leases. It extends the debt covenant hypothesis to explain why firms reduce the use of operating leases with the introduction.

This study develops a model, based on operating leases as an alternative financing source and the determinants of debt policy, to estimate the effects of gearing on operating lease intensity. High gearing is a proxy to probably closer to the violation of, or expected to violate, the gearing restriction in debt covenants given the retrospective capitalisation of operating leases, when IFRS 16 takes effect.

This study finds that operating lease intensity fell between 2011 (immediately after the first exposure draft leading to IFRS 16) and 2018 (immediately prior to the effective date of IFRS 16). It also finds that gearing affects changes in operating lease intensity over 2011 and 2018, consistent with the debt covenant hypothesis.

The introduction of IFRS 16 is a natural experiment with unique characteristics (the active lobbying behaviour, ex ante evidence on adverse economic consequences, a prolonged standard-setting period, etc.) valuable for accounting research.

A showcase about the relevance of financial reporting for contracting interests of firms and managers and a good reference for accounting standard setters in considering and managing the economic consequences of proposed accounting standards.

This study adds to the limited research on the consequences of accounting standards and documents the ex-post impact on firm leverage ratios and the behavioural aspects of reporting entities.

The analysis, carried out for this publication, concerned checking the nature of mating of gear wheels with different load conditions. The computation was made applying FEM in Abaqus 6.10-1 program and concerned spur gears in dual-power-path gears made of ABS. The same geometrical models, material parameters and boundary conditions were assumed for all the analysed stages of the computation. However, the values of torque transmitted from active wheels to passive wheel of the gearing were changed. The paper aims to discuss these issues.

Observing changes of stress levels for toothed wheel and pinions allows to state that for relatively low load values, bending stresses at tooth root change proportionally to the change of the applied load.

Values of contact stresses on mating teeth flanks were also defined for the most loaded part of the dual-power-path gearing, namely for a pinion. In case of contact stresses, it was observed that together with constant increase of torque value, the values of stresses change but the nature of these changes is not proportional to the applied load. Out of all the analysed variants, the most favourable, from the point of view of durability, was the situation in initial (theoretical) model with regular power division on all mating wheels.

Conclusions drawn as a result of numerical computation are helpful in defining the nature of work of dual-power-path gearing in different load conditions and will be compared to results of stand tests of the analysed gearing.

This paper examines the inter‐relationship between profitability, cost of capital and capital structure among property developers and contractors in Hong Kong. Whilst major indigenous local developers are among the largest and the most profitable in the world, their contractor counterparts are generally small and nowhere near as profitable. An analysis of financial data suggests that gearing is generally higher among contractors than developers. However, it does not mean that contractors borrow more than developers. Indeed they do not need to borrow as much as developers even if they have the assets to pledge as collateral. Contractors do not have to pay for high land costs, and they obtain project finance from developers through interim payments in lump sum contracts that are widely adopted in the industry. Their high gearing reflects more their low equity base than high level of debts. Their costs of equities are about double the developers’, probably due to their usually low or negative profit margins. This conclusion is substantiated by further regression analysis of the data. The findings indicate that capital gearing is positively related with asset but negatively with profit margins. This article concludes with a discussion on implications of such profitability divide between the two sectors on the unequal relationship between developers and contractors, and on their competitiveness.

Privately financed infrastructure projects commonly use a project finance structure. Project finance is expected to facilitate investment flow in risky environments. The objective of this paper examines the link between the use of project finance and investments in risky environments.

Project Finance International database has been used as the data source for this study. 3,372 transactions from power, oil and gas, transportation, telecommunication, and water supply sectors have been considered means analysis and multi-variate regression models have been used in the analysis.

The average project cost in a developing country was higher than that of developed countries. Gearing ratio, however, was higher in the developed countries. This indicated that the projects had a lower level of inherent risk, which enabled them to get funded at high gearing levels. The proportion of foreign banks in the syndicate was higher in the developing countries, which indicated that the use of project finance has helped to attract investment from foreign investors.

Practitioners and project development companies in the developing countries should actively consider using project financing technique for achieving financial closure of large infrastructure projects. Simultaneously, policy makers should create appropriate supporting institutional framework (regulatory, legal, contractual arrangements) that supports the use of project finance.

As far as the authors know, this study uses a dataset that has not been used in the previous studies. The results of this paper strengthen the understanding of project financing.

Despite improvements in certain countries in recent years, the provision of performance information on the direct real estate market still suffers from a lack of timeliness and reliability. The latter problem is particularly an issue for higher‐frequency data provision. This paper investigates whether there is information from the indirect market that might be useful in helping us understand better the direct real estate market. Direct real estate indices do not measure the performance of underlying transactions prices properly because they are based on valuations – and therefore may be subject to valuation smoothing. Indirect real estate indices do not properly measure the value investors put on the underlying assets of real estate companies because real estate companies are geared. Compares appropriately adjusted indices, and shows that there is information in indirect index returns that can usefully help us understand the performance of the direct market and an index is produced of de‐geared monthly real estate share returns for the UK.

OVER THE PAST FEW YEARS interest has grown in Britain and elsewhere in the use of extreme‐pressure (e.p.) lubricants (or more correctly perhaps, though less conveniently, load‐carrying additive lubricants) for marine main propulsion gearing, and many ships now go to sea with such lubricants in their main systems. Several technical papers on the development of such lubricants have been contributed recently, for example by Elliott and Edwards and Socolofsky and others, the main purpose of this paper is to indicate present and likely future marine main reduction‐gear requirements and to discuss how far these are met by the developments in extreme‐pressure lubricants.

We utilize a unique comprehensive dataset, drawn from the 1999 baseline survey of some 2000 micro and small-scale enterprises (MSEs) in Kenya. We analyze the financing behavior of these enterprises within the framework of a heterodox model of debt-equity and gearing decisions. We also study determinants of the success rate of loan applications. Our results emphasize three major findings. First, MSEs in Kenya obtain debt from a wide variety of sources. Second, debt-equity and gearing decisions by MSEs and their success rates in loan applications can all be understood by relatively simple models which include a mixture of conventional and heterodox variables. Third, and in particular, measures of the tangibility of the owner's assets, and the owner's education and training have a significant positive impact on the probability of borrowing and of the gearing level. These findings have important policy implications for policy makers and entrepreneurs of MSEs in Kenya.