Section I. Research Question Main research question: How does CEO overconfidence affect firms’ M&A performance? Under the traditional corporate finance studies, we usually assume managers and investors to be rational. However, recent research in behavioral corporate finance proposed the effect of managerial traits on corporate financial decisions and performances. For instance, overconfident managers tend to overestimate the returns and underestimate the risk, thus, the managerial hubris will lead
generally recognized as low efficient tool to deal with crisis. However, often based on political rather than economic and financial considerations, austerity continues to apply, and sometimes imposed on countries that have lost control over their finances. Countries use austerity measures to avoid the sovereign debt crisis. That is, when creditors begin to worry that the country does not fulfill his debt. This usually occurs when the ratio of debt to GDP is above 90%. This means that the debt is almost
Corporate organizations have strategic growth plans like attaining a particular market share , attaining a revenue figure or achieving geographical business coverage and even a strategic partnership like merger and acquisitions . All these goals or strategies are futuristic and have financial implications to the firm. Capital budgeting is the process of identifying and evaluating capital project in order to accept or reject the project. The process can be summarized into ; 1) Idea generation
5.5 Capital Structure Analysis (pg-53) A firm’s capital structure primarily comprises of two components, the Debt and the equity. Debt: A sum of money that is owed or due. Whatever a company has on its own, money, goods, services & other liabilities of the company which are due all comes in this heading Debts. Equity: The value of Share issued by a company. It is commonly referred as the ordinary share, partial ownership, maximum entrepreneurial risk associated with the company. These shareholders
The McCain-Feingold Campaign Finance Reform Laws The McCain-Feingold Act campaign finance reform law, also known as the Bipartisan Campaign Reform Act of 2002, (BCRA) has been more effective at shifting the tone of the campaign finance reform debate than at achieving any real progress in removing the nefarious influence of money on elections. In the twelve years following the BCRA’s passage, the Supreme Court has hamstrung the law piece by piece in rulings that favor corporate donors’ ability to
and it greatly influences the rich and the poor and affecting their way of living. Taxation Taxes are fees that are placed on products and an individual’s income that the government has imposed. Taxes first began in 1917 as a way to temporarily finance the war, however the government found it beneficial to have these taxes. The main purpose of these
adjustment behavior if the firm has a target level of leverage and if deviations from that target are gradually removed over time. The trade-off theory of capital structure explained the idea that a company decides on the amount of debt finance and how much equity finance to use by balancing the
information asymmetry are considered to be the three types of agency costs (Copeland, Weston, and Shastri, 2005). In economics, the agency theory is associated with the structure of the optimal compensation contract between the principal and the agent. In finance, however, the agency theory mainly focuses
This work investigates the factors that influence firms’ risk appetite (the amount of risk that a firm is willing to accept) and, in particular, focuses on the characteristics and functioning of the board. The first chapter includes the analysis of the literature regarding risk, risk components and risk definitions. The first question that this chapter tries to answer is “what is risk?”. There is no general agreement on the definition of risk, but the ISO 31000 (2009) defines risk as “the effect
listed companies in US from 1988 to 2006. The structure of corporation is an important factor which influences the cash holding level. The corporation with diverse corporation management has less cash holding. This is because the corporation could finance through its internal capital market so that it has greater opportunities for asset sales and higher agency cost. WANG Fusheng and SONG Haixu (2012) used the fixed effects model and random effects model to analyze the data of listed companies in Chinese