REVIEW OF LITERATURE

Article -1
Author Info
ArnoudWABoot
Anjan V Thakor
Additional information is available for the following registered
author(s):
Abstract
The paper explains why an issuer may wish to raise external capital
by selling multiple financial claims that partition its total asset cash
flows, rather than a single claim !t is shown that in an asymmetric
information environment, the issuer"s expected revenue is enhanced
by such cash flow partitioning because it ma#es informed trade more
profitable This approach seems capable of shedding light on
corporate incentives to issue debt and e$uity, as well as on financial
intermediaries" incentives to issue multiple classes of claims against
portfolios of securiti%ed assets
Article-&
1
Author info ' Abstract ' (ublisher info ' )ownload info ' *elated
research ' +tatistics
Author Info
Masaya Sakuragawa ( masaya,econnagoya-cuac-p) ()epartment
of .conomics, /agoya 0ity 1niversity, 2amanohata-1, 3i%uho-cho,
3i%uho-#u, /agoya 456-7891, :A(A/)
Abstract
The aim of this paper is to study the design of optimal capital
structure of a ;large; intermediary when the intermediary faces a non-
diversifiable ris#, within the standard costly-state-verification (0+<)
model ! demonstrate that, under wea#er conditions, a ;large;
intermediary reali%es more efficient allocation by issuing both debt
and e$uity than by issuing only debt 1nli#e )iamond (1=74) and
>illiamson (1=75), the set of optimal contracts involves ex ante
monitoring made by shareholders of the intermediary 0hanges in
parameters, such as the variance of the aggregate ris# or the cost of
monitoring, affect ban#ruptcy costs and the capital structure
Article-?
Getting the Capital Structure Right by 1ames D. Cotterman
2
/ovember &99? @Aow much capital do we need to have to be
properly capitali%edBC is a $uestion ! am often as#ed !n this time of
economic uncertainty, it is an even more appropriate $uestion
The need for capital is perhaps one of the most confusing and
misunderstood issues among law firm partners Aow much capital is
needed is an even larger challenge to get agreement on This article
will help educate your lawyers as to the changing need for better
capitali%ation, how to determine how much capital is needed and how
to rationally (and safely) use debt in the capital structure
>e were vividly reminded of the relationship between the two with
the demise of +ilicon <alley powerhouse Drobec#, (hleger E
Aarrison, FF( +uch an event may bring home a nagging $uestion
about your firmGs finances !f you are loo#ing for a $uic# guide to
whether your firm has ta#en on too much debt, ! will also provide
some easy metrics that you can use as an early warning system
Aow to begin! am often as#ed what is the proper capital structure for
a law firm There are guidelines that this article will explore later on
Dut in designing a capital structure for any particular law firm one
must first start with the purpose of the organi%ation, the partnersG
financial tolerance and the dynamic shifts in the mar#etplace over ?9
years
3ost law firms operate on a modified cash basis of accounting
(artners generally have relatively modest buy-in obligations and are
entitled to e$ually modest buy-outs These partners do not view the
firm as a vehicle to accumulate wealth or provide for retirement
1
, at
least not in the value of the organi%ation
There are good reasons for this that are best left to a separate article
on law firm valuation Hor now letGs accept the proposition that, for
3
many, the business we call a law firm does not build wealth li#e many
of the business corporations that lawyers serve +pea# with partners
in these firms and you are confronted with a healthy dose of
s#epticism about the owners investing much of their own money in
the form of capital
There are some law firms whose owners view this issue differently
and see the accumulation of an e$uity position as at least an important
component of their personal balance sheet, if not also a component of
retirement security At these firms, one will gain a more receptive
audience with respect to owner investment in the firm (artners in
these firms often rely less on borrowed money to capitali%e the firm
Article-4
Designing an Optimal ] Capital Structure
A number of developments in the past few years have dramatically
changed the framewor# for evaluating capital structure alternatives
for 1+ insured depository institutions of all si%es Hirst, the
implementation of Hinancial Accounting +tandards Doard + A number
of developments in the past few years have dramatically changed the
framewor#
Tags: capital structure, Hinancial Accounting +tandards Doard
Research articles 2005-09-01
Article-5
4
Target Corporation to Review Ownership Alternatives for Credit
Card Receivables; Company Also to Analyze Capital Structure
3!//.A(IF!+ -- Target 0orporation (/2+.:TJT) announced
today that it will review potential ownership alternatives for its credit
card receivables, an asset of approximately K6 billion The company
also announced that it will re-evaluate its use of debt in its capital
structure and its pace of share repurchases The company expects
Article-6
Understanding Venture Capital Structure: A Tax Explanation for
Convertible Preferred Stock
Abstract:
The capital structures of venture capital-bac#ed 1+ companies share
a remar#able commonality: overwhelmingly, venture capitalists ma#e
their investments through convertible preferred stoc# /ot
surprisingly, a large part of the academic literature on venture capital
has sought to explain this peculiar pattern
Hinancial economists have developed models showing, for example,
that convertible securities allocate control depending on the portfolio
company"s success, operate as a signal to overcome various #inds of
information asymmetry, and align the incentives of entrepreneurs and
venture capital investors !n this Article we extend this literature by
examining the influence of a more mundane factor, tax law, on
venture capital structure A firm that issues convertible preferred
stoc# to venture capitalists is able to offer more favorable tax
treatment for incentive compensation paid to the entrepreneur and
other portfolio company employees: !nstead of being taxed currently
at ordinary income rates, the entrepreneur and employees can defer
5
tax until the incentive compensation is sold (or even longer), at which
point a preferential tax rate is available /o tax rule explicitly
connects the employee"s tax treatment with the issuance of
convertible preferred stoc# to venture capitalists *ather, this lin# is
part of tax ;practice; - the plumbing of tax law, familiar to
practitioners but, predictably, opa$ue to those, including financial
economists, outside the day-to-day tax practice )espite its obscurity,
this tax factor is li#ely to be of first order importance !ntense
incentive compensation for portfolio company founders and
employees is a fundamental feature of venture capital contracting
Havorable tax treatment for this compensation is a byproduct and, we
believe, a core purpose of the use of convertible preferred stoc#
>e also highlight an important but low visibility tax subsidy for the
venture capital mar#et, and the early stage, usually high technology,
firms that are financed there Although this subsidy arose
inadvertently, it has an interesting structure Hunds are not provided
directly to companies selected by the government (a familiar
techni$ue outside the 1nited +tates), or to all companies !nstead,
venture capital investors are enlisted as the subsidy"s gate#eeper As a
practical matter, only companies that can attract venture capital
investment receive this subsidy Iur analysis thus adds a different
twist on the familiar debate about providing subsidies through the tax
system, instead of through direct expenditures or favorable regulatory
treatment
Article-7
6
Determinants of capital structure of banks in Ghana: an
empirical approach
Author: Amidu, 3ohammed
Source: Daltic :ournal of 3anagement, <olume &, /umber 1, &996 ,
pp 56-6=(1?)
Publisher: .merald Jroup (ublishing Fimited
Ley: Hree 0ontent ,/ew 0ontent ,+ubscribed 0ontent ,Hree Trial
0ontent
Abstract:MDN(urposeMODN - The purpose of this paper is to
investigate the dynamics involved in the determination of capital
structure of ban#s in Jhana MDN)esignOmethodologyOapproachMODN
- The study employs panel regression model in examining the capital
structure of ban#s in Jhana MDNHindingsMODN - The results of this
study show that profitability, corporate tax, growth, asset structure
and ban# si%e influence ban#s" financing or capital structure decision
The significant finding of this study is that, more than 76 per cent of
the ban#s" assets are financed by debts and out of this, short-term
debts appear to constitute more than three $uarters of the capital of
the ban#s This highlights the importance of short-term debts over
long-term debts in Jhanaian ban#s" financing
MDNIriginalityOvalueMODN - The main value of this paper is
identification of factors that determine capital structure of ban#s in
Jhana
Keywords: Dan#sP 0apital structureP )eterminantsP Jhana
Article -7
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0apital +tructure )ecisions !n Hinancial 3anagement 8 /ovember -
(resentation Transcript
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? >hat is capital structureB S 0ombination of capital is called capital
structure The firm may use only e$uity, or only debt, or a
combination of e$uity T debt, or a combination of
e$uityTdebtTpreference shares or may use other similar
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4 Aow do you design capital structureB 1 !t should minimise cost of
capital & !t should reduce ris#s ? !t should give re$uired flexibility
4 !t should provide re$uired control to the owners 8 !t should enable
the company to have ade$uate finance wwwafterschooolt#
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8 >hat are the ris#s associated with capital structure decisionsB S
3eaning of ris# U variability in income is called ris# S Dusiness ris#
8
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structure !t is influenced by the ratio of fixed cost in total cost !f the
ratio of fixed cost is higher, business ris# is higher S Hinancial ris# U
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caused due to leverage !f leverage is more, variability will be more
and thus financial ris# will be
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Article-9Abstract:
The -oint determination of capital structure and investment ris# is
exam-ined Iptimal capital structure re ects both the tax advantages
of debt less default costs (3odigliani-3iller), and the agency costs
resulting from asset sub-stitution (:ensen-3ec#ling) Agency costs
restrict leverage and debt maturity and increase yield spreads, but
their importance is relatively small for the range of environments
considered *is# management is also examined Aedging permits
greater leverage .ven when a rm cannot precommit to hedging, it
will still do so +urprisingly, hedging bene ts often are greater when
agency
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