Ebook Copeland''s financial theory and corporate policy: Part 2
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Ebook Copeland''s financial theory and corporate policy: Part 2
PART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 ry of decision making under uncertainty as applied to the field of finance. The theory7 of finance, as presented in the first half of the text, is applicable to a wide range of finance topics. The theoretical foundations are prerequisite to almost any of the traditional subject areas in finance curr Ebook Copeland''s financial theory and corporate policy: Part 2 icula: e.g.. portfolio management, corporation finance, commercial banking, money and capital markets, financial institutions, security analysis, inteEbook Copeland''s financial theory and corporate policy: Part 2
rnational finance, investment banking, speculative markets, insurance, and case studies in finance. Since all these topics require a thorough understaPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 the theory7 of finance to a corporate setting. The fundamental issues are: Does financing matter? Does the type of financing (debt or equity) have any real effect on the value of the firm? Does the form of financial payment (dividends or capital gains) have any effect on the value of claims held by Ebook Copeland''s financial theory and corporate policy: Part 2 various classes of security holders?Because these issues are usually discussed in the context of corporate finance they may seem to be narrow. This isEbook Copeland''s financial theory and corporate policy: Part 2
not the case. First of all. the definition of a corporation is very broad. The class of corporations includes not only manufacturing firms but also cPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 equity decision applies to all individuals as well as all corporations. Therefore although the language is narrow, the issues are very broad indeed. They affect almost every economic entity in the private sector of the economy.357358 CORPORATE POLICY: THEORY. EVIDENCE. AND APPLICATIONSAs we shall se Ebook Copeland''s financial theory and corporate policy: Part 2 e, the theoretical answer to the question "Does financing matter?" is often a loud and resounding "Maybe." often the answer depends on the assumptionsEbook Copeland''s financial theory and corporate policy: Part 2
of the model employed to study the problem. Under different sets of assumptions, different and even opposite answers are possible. This is extremely PART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 ot always, the preponderance of evidence supports a single conclusion.It is important to keep in mind that hypotheses cannot be tested by the realism of the assumptions used to derive them. What counts for a positive science is the development of theories that yield valid and meaningful predictions Ebook Copeland''s financial theory and corporate policy: Part 2 about observed phenomena. On the first pass, what counts is whether or not the hypothesis is consistent with the evidence at hand. Further testing invEbook Copeland''s financial theory and corporate policy: Part 2
olves deducing new facts capable of being observed but not previously known, then checking those deduced facts against additional empirical evidence. PART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 o determine which hypothesis is validated.Chapter I I is devoted to various empirical studies related to the efficient market hypothesis. Most of the evidence is consistent with the weak and semistrong forms of market efficiency but inconsistent with the strong form. In certain situations, individua Ebook Copeland''s financial theory and corporate policy: Part 2 ls with inside information appear to be able to cam abnormal returns. In particular, corporate insiders can beat the market when trading in the securiEbook Copeland''s financial theory and corporate policy: Part 2
ties of their firm. Also, block traders can cam abnormal returns when they trade al the block price, as can purchasers of new equity issues. I he lastPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 e inexplicable abnomial rales of return. Chapter 12 returns to the theoretical problem of how to evaluate multiperiod investments in a world with uncertainly. Il shows the set of assumptions necessary in order to extend the simple one-period CAPM rules into a multiperiod world. Il also discusses two Ebook Copeland''s financial theory and corporate policy: Part 2 interesting applied issues: the abandonment problem, and the technique for discounting uncertain costs.Chapter 13explores the theory of capital strucEbook Copeland''s financial theory and corporate policy: Part 2
ture and the cost of capital. 1 his is the fust of the corporate policy questions that relate to whether or not the value of the firm is affected by tPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 holders of the firm. 1 his helps to complete, in a consistent fashion, the theory of project selection. Capital budgeting decisions that are consistent with shareholder wealth maximization require use of the correct technique (the NPV criterion), the correct definition ofcash flows (operating cash f Ebook Copeland''s financial theory and corporate policy: Part 2 lows after taxes), and the correct cost of capital definition.Chapter 14discusses empirical evidence on whether or not the debt-to-equity ratio (i.e.,Ebook Copeland''s financial theory and corporate policy: Part 2
the type of financing) affects the value of the firm. This is one of the most difficult empirical issues in finance. Although not conclusive, the eviPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 work remains to be done in this area. Chapter 14 also provides a short example of how to actually compute the cost of capital.CORPORATE POLICY: THEORY. EVIDENCE. AND APPLICATIONS 359Chapter 15looks at the relationship between dividend policy and the value of the firm. There are several competing the Ebook Copeland''s financial theory and corporate policy: Part 2 ories. However, the dominant argument seems to be that the value of an all-equity firm depends on the expected returns from current and future investmEbook Copeland''s financial theory and corporate policy: Part 2
ent and not on the form in which the returns arc paid out. If investment is held constant, it makes no difference whether the firm pays out high or loPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 cipates permanently higher levels of return from investment, and of course, higher returns on investment w ill result in higher share prices.Chapter 16presents empirical evidence on the relationship between dividend policy and the value of the firm that, for the most part, seems to be consistent wit Ebook Copeland''s financial theory and corporate policy: Part 2 h the theory namely, that dividend policy docs not affect shareholders' wealth, rhe chapter also applies the valuation models (presented in Chapter 15Ebook Copeland''s financial theory and corporate policy: Part 2
) to an example.Chapter 17uses the subject of leasing to bring together a number of further applications of capital structure and cost of capital issuPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 o cancel (with some notice and with moderate penalties). Chapter 18 discusses several applied topics of interest to chief financial officers pension-fiind management, executive compensation, leveraged buyouts. ESOP's and Interest rate swaps.Chapters 19 and 20 consider the widespread phenomenon of me Ebook Copeland''s financial theory and corporate policy: Part 2 rgers. They begin with the proposition that without synergy, value additivity holds in mergers as it does in other types of capital budgeting analysisEbook Copeland''s financial theory and corporate policy: Part 2
. Mergers do not affect value unless the underlying determinants of value—the patterns of future cash flows or the applicable capitalization factors_aPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 rs of acquiring firms experience neither significant benefit nor harm.Chapters 21 and 22 conclude the book by placing finance in its increasingly important international setting. A framework for analyzing the international financial decisions of business firms is developed by summarizing the applica Ebook Copeland''s financial theory and corporate policy: Part 2 ble fundamental propositions. The Fisher effect, which states that nominal interest rates reflect anticipated rales of inflation, is carried over to iEbook Copeland''s financial theory and corporate policy: Part 2
ts international implications. This leads to the Interest Rate Parity Theorem, which states that the current forward exchange rate for a country's curPART IICorporate Policy: Theory, Evidence, and ApplicationsThe first part of the text covers most of what has come to be recognized as a unified theor Ebook Copeland''s financial theory and corporate policy: Part 2 wer Parity Theorem states that the difference between the current spot exchange rate and the future spot exchange rate of a country's currency in relation to the currency of another country will reflect the ratio of the rates of price changes of their internationally traded goods. We point out that Ebook Copeland''s financial theory and corporate policy: Part 2 exchange risk is a "myth" in the sense that departures from fundamental parity theorems reflect changes in underlying demand and supply conditions thaEbook Copeland''s financial theory and corporate policy: Part 2
t would cause business risks even if international markets were not involved. The fundamental relations provide the principles to guide firms in adjusGọi ngay
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