Browsing by Subject "Capital investments"
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Item A Sensitivity Model For the Analysis of Capital Budgeting Decisions(Texas Tech University, 1973-12) Lara, Mario A. B. d.Not Available.Item An empirical evaluation and extension of the postaudit of capital expenditures.(Texas Tech University, 1974-12) Dillon, Ray DNot availableItem Essays on financial institutions(2008-08) Shah, Ronnie Rashmi, 1981-; Almazan, Andres; Titman, SheridanIn this dissertation, I explore the ability of financial institutions to impact firm behavior. The first essay examines whether relationships between venture capital owners (VCs) and investment banking underwriters affect a firm’s ability to issue equity. I find that past interactions between VC owners and underwriters in the form of previously underwritten initial public offerings (IPOs) significantly increase the likelihood that an IPO firm chooses a specific underwriter. In terms of how VCs and underwriters associate with each other, older VCs partner with more reputable underwriters. Despite paying higher fees, issuing firms benefit from stronger VC-Underwriter relationships through upward offer price revisions and higher valuations. VC-Underwriter relationships also predict underwriter choice in subsequent equity offerings. This essay provides empirical evidence that suggests VCs use their relationships with investment banks to enable their portfolio firms access to high quality underwriters and better underwriting services. The second essay investigates whether credit rating concerns affect capital investment decisions. Using ex-ante measures of proximity to a rating change, I find that firms that are near a credit rating downgrade spend significantly less on capital expenditures relative to those not near a rating change. The response of firms to credit rating upgrades is not symmetric: firms do not seem to adopt significantly different investment policies when near an upgrade. This effect of lowering investment when near a credit downgrade is stronger for firms that face financial constraints, experience greater adverse selection and are more active in debt markets. Related to reductions in investment, firms near rating changes also spend less on research and development expenses and pay lower dividends. My findings are consistent with firms conserving financial resources to prevent adverse credit rating changes that could increase their cost of capital.Item Public Investment Criteria in Cost-Benefit Analysis(Texas Tech University, 1972-05) Brown, Bryan WNot Available.Item The cost of capital: an evaluation of the Modigliani-Miller propositions(Texas Tech University, 1965-08) Peterson, Alfred LeonThe concept capital cost occupies a position of unquestioned importance in the field of business finance. In recent years, such research found theoretical work has been done in this field by both theorists and practitioners. An evaluation of their results in total would require a paper of considerably greater length and higher degree of of sophistication than is intended here. This paper, is, therefore, confined to an evaluation of the most popular of the more recent theories, namely, the Modigliani Killer propositions. In order to clearly define the purpose of this paper, it is necessary to state that this paper is intended In no way to derive a new formula for measuring the cost of capital. Its purpose is merely to state the problem and some of the early attempts to solve it, and then to present the Modigliani Killer theory. This theory is explained, and an attempt is made to show how it is being attacked and the measures being taken to defend it.Item The Purchasing-Power Loss Due To Historical-Cost Depreciation(Texas Tech University, 1973-12) Landers, Thomas LeeNot Available.Item Three essays on capital adjustment, reallocation and aggregate productivity(2007) Cao, Shutao, 1970-; Cooper, Russell W., 1955-; Corbae, DeanThis dissertation consists of three chapters. Chapter one estimates the capital adjustment costs at the plant level in a model entry and exit. We find that the estimated variance of plant-specific productivity shock is larger than obtained from balanced panel estimation. Estimation using the unbalanced panel generates a larger irreversibility cost, a smaller disruption cost, and a smaller convex cost, all compared with the estimates by Cooper and Haltiwanger (2006). In chapter two, we study how much of the aggregate productivity changes can be accounted for by the capital reallocation. We also study the impact of capital reallocation on the productivity dispersion across firms. We find that the capital reallocations accounts for roughly 12 percent of the labor productivity and capital productivity are reduced as the reallocation activity increases. When the economy-wide technology has a positive change, the reallocation increases temporarily then drops to its original level. After a short transition, the economy settles down with an increased labor productivity. Chapter three further studies the quantitative role of allocation, entry and exit in the growth of aggregate productivity. We find that, without including in the model the forces that drive the entry and exit changes, the model economy has a modest increase in the aggregate productivity as a result of decrease in the fixed reallocation cost.Item Two essays on capital structure(2004) Kayhan, Ayla; Titman, SheridanThis dissertation consists of two essays on capital structure. Essay one, joint with Sheridan Titman, examines how cash flows, investment expenditures and stock price histories affect corporate debt ratios. Consistent with earlier work, we find that these variables have a substantial influence on changes in capital structure. Specifically, stock price changes and financial deficits (i.e., the amount of external capital raised) have strong influences on capital structure changes, but in contrast to previous conclusions, we find that their effects are subsequently at least partially reversed. These results indicate that although a firm’s history strongly influence their capital structures, that over time, financing choices tend to move firms towards target debt ratios that are consistent with the tradeoff theories of capital structure. Essay two examines how managerial entrenchment, defined here as the extent to which managers can act in their self-interest, influences the levels of and changes in debt ratios. Consistent with prior research, I find that entrenched managers prefer lower leverage. Analyses of financing decisions indicate that they achieve lower debt ratios by issuing more equity and retaining more profits. Debt issuance, however, does not appear to be influenced by entrenchment. Examination of leverage changes suggests that increases in debt ratios in response to external financing needs are similar for all types of managers. Finally, building on the documented market timing effect on capital structure, I find that decreases in leverage due to equity issuance following increases in stock prices are greater when managers are entrenched.