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1、西安工业大学北方信息工程学院毕业设计(论文)外文翻译资料系 别 管理信息系 专 业 财务管理 班 级 B080510 姓 名 郭 静 学 号 B08051019 导 师 王化中 Optimal Capital Structure: Reflections on economic and other values By Marc Schauten & Jaap Spronk1 1. Introduction Despite a vast literature on the capital structure of the firm (see Harris and Raviv, 1991, Gra
2、ham and Harvey, 2001, Brav et al., 2005, for overviews) there still is a big gap between theory and practice (see e.g. Cools, 1993, Tempelaar, 1991, Boot & Cools, 1997). Starting with the seminal work by Modigliani & Miller (1958, 1963), much attention has been paid to the optimality of capital stru
3、cture from the shareholders point of view. Over the last few decades studies have been produced on the effect of other stakeholders interests on capital structure. Well-known examples are the interests of customers who receive product or service guarantees from the company (see e.g. Grinblatt & Titm
4、an, 2002). Another area that has received considerable attention is the relation between managerial incentives and capital structure (Ibid.). Furthermore, the issue of corporate control2 (see Jensen & Ruback, 1983) and, related, the issue of corporate governance3 (see Shleifer & Vishney, 1997), rece
5、ive a lions part of the more recent academic attention for capital structure decisions. From all these studies, one thing is clear: The capital structure decision (or rather, the management of the capital structure over time) involves more issues than the maximization of the firms market value alone
6、. In this paper, we give an overview of the different objectives and considerations that have been proposed in the literature. We make a distinction between two broadly defined situations. The first is the traditional case of the firm that strives for the maximization of the value of the shares for
7、the current shareholders. Whenever other considerations than value maximization enter capital structure decisions, these considerations have to be instrumental to the goal of value maximization. The second case concerns the firm that explicitly chooses for more objectives than value maximization alo
8、ne. This may be because the shareholders adopt a multiple stakeholders approach or because of a different ownership structure than the usual corporate structure dominating finance literature. An example of the latter is the co-operation, a legal entity which can be found in a.o. many European countr
9、ies. For a discussion on why firms are facing multiple goals, we refer to Hallerbach and Spronk (2002a, 2002b). In Section 2 we will describe objectives and considerations that, directly or indirectly, clearly help to create and maintain a capital structure which is optimal for the value maximizing
10、firm. The third section describes other objectives and considerations. Some of these may have a clear negative effect on economic value, others may be neutral and in some cases the effect on economic value is not always completely clear. Section 4 shows how, for both cases, capital structure decisio
11、ns can be framed as multiple criteria decision problems which can then benefit from multiple criteria decision support tools that are now widely available. 2. Maximizing shareholder value According to the neoclassical view on the role of the firm, the firm has one single objective: maximization of s
12、hareholder value. Shareholders possess the property rights of the firm and are thus entitled to decide what the firm should aim for. Since shareholders only have one objective in mind - wealth maximization - the goal of the firm is maximization of the firms contribution to the financial wealth of it
13、s shareholders. The firm can accomplish this by investing in projects with positive net present value4. Part of shareholder value is determined by the corporate financing decision5. Two theories about the capital structure of the firm - the trade-off theory and the pecking order theory - assume shar
14、eholder wealth maximization as the one and only corporate objective. We will discuss both theories including several market value related extensions. Based on this discussion we formulate a list of criteria that is relevant for the corporate financing decision in this essentially neoclassical view.
15、The original proposition I of Miller and Modigliani (1958) states that in a perfect capital market the equilibrium market value of a firm is independent of its capital structure, i.e. the debt-equity ratio6. If proposition I does not hold then arbitrage will take place. Investors will buy shares of
16、the undervalued firm and sell shares of the overvalued shares in such a way that identical income streams are obtained. As investors exploit these arbitrage opportunities, the price of the overvalued shares will fall and that of the undervalued shares will rise, until both prices are equal. When cor
17、porate taxes are introduced, proposition I changes dramatically. Miller and Modigliani (1958, 1963) show that in a world with corporate tax the value of firms is a.o. a function of leverage. When interest payments become tax deductible and payments to shareholders are not, the capital structure that
18、 maximizes firm value involves a hundred percent debt financing. By increasing leverage, the payments to the government are reduced with a higher cash flow for the providers of capital as a result. The difference between the present value of the taxes paid by an unlevered firm (Gu) and an identical
19、levered firm (Gl) is the present value of tax shields (PVTS). Figure 1 depicts the total value of an unlevered and a levered firm7. The higher leverage, the lower Gl, the higher Gu - Gl (=PVTS). In the traditional trade-off models of optimal capital structure it is assumed that firms balance the mar
20、ginal present value of interest tax shields8 against marginal direct costs of financial distress or direct bankruptcy costs.9 Additional factors can be included in this trade-off framework. Other costs than direct costs of financial distress are agency costs of debt (Jensen & Meckling, 1976). Often
21、cited examples of agency costs of debt are the underinvestment problem (Myers, 1977)10, the asset substitution problem (Jensen & Meckling, 1976 and Galai & Masulis, 1976), the play for time game by managers, the unexpected increase of leverage (combined with an equivalent pay out to stockholders to
22、make to increase the impact), the refusal to contribute equity capital and the cash in and run game (Brealey, Myers & Allan, 2006). These problems are caused by the difference of interest between equity and debt holders and could be seen as part of the indirect costs of financial distress. Another b
23、enefit of debt is the reduction of agency costs between managers and external equity (Jensen and Meckling, 1976, Jensen, 1986, 1989). Jensen en Meckling (1976) argue that debt, by allowing larger managerial residual claims because the need for external equity is reduced by the use of debt, increases
24、 managerial effort to work. In addition, Jensen (1986) argues that high leverage reduces free cash with less resources to waste on unprofitable investments as a result.11 The agency costs between management and external equity are often left out the trade-off theory since it assumes managers not act
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