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Autor
Crnigoj Matjaz (University of Ljubljana, Slovenia)
Tytuł
Risk Averse Insiders with the Specific Objective Function and the Capital Structure
Źródło
Prace Naukowe / Akademia Ekonomiczna w Katowicach. Finanse wobec sfery realnej gospodarki : praca zbiorowa. T. 2, 2008, s. 37-51, tab., bibliogr. 22 poz.
Słowa kluczowe
Finanse przedsiębiorstwa, Sektor przedsiębiorstw, Struktura kapitału przedsiębiorstwa, Szacowanie ryzyka
Enterprise finance, Manufacturing sector, Company capital structure, Risk estimating
Abstrakt
In this paper, I focus on the capital structure implications of having risk averse insiders with the specific objective function in control. As already argued in Crnigoj and Mramor (2007), employee-governed firms - which are typically more risk averse and in general maximize the wages instead of shareholders' wealth - opt for the lowest possible level of debt since the higher interest payments reduce near term cash flow and increase the bankruptcy risk. Observing relatively low leverage in the large proportion of the firms, some of them actually without any debt, and the fact that far the largest share of financing needs are met by internal sources, I empirically test the dependence of the firm's leverage and the probability of the firm having a bank loan on the fact who governed the firm. Using the questionnaire data for Central Eastern Europe in Baltic States (CEB) from EBRD-World Bank Business Environment and Enterprise Performance Survey, BEEPS (III) (EBRD and World Bank, 2005), which allow us to separate sufficient share of employee-governed and manager-governed firms, I have found that firms governed by insiders operate with significantly lower leverage as well as that the probability that a firm uses a bank loan drops at all if the insiders are the largest shareholders. In all specifications of the empirical models, I control the firm's specific capital structure determinants, industry specific effects and differences in the creditor rights between countries. The paper is structured as follows: in the second section I discuss capital structure implications of having risk averse insiders with the specific objective function in control. In the third section I look at the data while in the forth I present the methodology used in the empirical study. In the fifth section I discus the results and the sixth section concludes. (fragment of text)
Dostępne w
Biblioteka Główna Uniwersytetu Ekonomicznego w Krakowie
Biblioteka Szkoły Głównej Handlowej w Warszawie
Biblioteka Główna Uniwersytetu Ekonomicznego w Katowicach
Biblioteka Główna Uniwersytetu Ekonomicznego w Poznaniu
Biblioteka Główna Uniwersytetu Ekonomicznego we Wrocławiu
Bibliografia
Pokaż
  1. Berger P.G., Ofek E., Yermack D.L.: Managerial Entrenchment and Capital Structure Decisions. "Journal of Finance" 1997, Vol. 52, No. 4.
  2. Berk A.: Determinants of Leverage in Slovenian Blue-chip Firms and Stock Performance Following Substantial Debt Increases. "Post-communist Economies" 2006, Vol. 18, No. 4.
  3. Chen J.J.: Determinants of Capital Structure of Chinese-listed Companies. "Journal of Business Research" 2004, Vol. 57, Issue 12.
  4. Cornelli F., Portes R., Schaffer M.: The Capital Structure of Firms in Central and Eastern Europe. CEPR Discussion Paper No. 1392. Centre for Economic Policy Research 1996.
  5. Crnigoj M., Mramor D.: Capital Structure in CEE Transition Economies: Some Evidence from Slovenian firms. 5th INFINITI Conference on International Finance, Trinity College Dublin, Ireland, 2007. Conference Paper.
  6. Crnigoj M., Mramor D., Berk Skok A.: Financing Patterns in European Transition Economies. In: Finance and Real Economy. Ed. M. Iwanicz-Drozdowska, and K. Znaniecka. Karol Adamiecki University of Economics, Katowice 2008.
  7. Delcoure N.: The Determinants of Capital Structure in Transitional Economies. "International Review of Economics and Finance" 2007, Vol. 16, No. 2.
  8. EBRD: Transition Report 2006, Finance in Transition. European Bank for Reconstruction and Development, 2006.
  9. EBRD and World Bank. EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS) III. European Bank for Reconstruction and Development and World Bank, 2005.
  10. Faleye O., Mehrotra V., Morck R.: When Labour ffas a Voice in Corporate Governance. "Journal of Financial and Quantitative Analysis" 2006, Vol. 41, No. 3.
  11. Harris M., Raviv A.: Corporate Control Contests and Capital Structure. "Journal of Financial Economics" 1988, Vol. 20.
  12. Israel R.: Capital Structure and the Market for Corporate Control: The Defensive Role of Debt Financing. "Journal of Finance" 1991, Vol. 46, No. 4.
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  15. Klapper L.F., Sarria-Allende V., Sulla V.: Small- and Medium-Size Enterprise Financing in Eastern Europe. World Bank Policy Research Working Paper No. 2933, World Bank 2002.
  16. La Porta R., Lopez-De-Silanes F., Shleifer A., Vishny R.W.: Legal Determinants of External Finance. "The Journal of Finance" 1997, Vol. 52, No. 3.
  17. Mramor D., Valentincic A.: When Maximizing Shareholders' Wealth Is Not the Only Choice. "Eastern European Economics" 2001, Vol. 39, No. 6.
  18. Nivorozhkin E.: Firms' Financing Choices in EU Accession Countries. BOFIT Discussion Papers 2004 No. 6, Bank of Finland and BOFIT - Institute for Economics in Transition 2004.
  19. Pistor K., Raiser M., Gelfer S.: Law and Finance in Transition Economies. "Economics of Transition" 2000, Vol. 8, No. 2.
  20. Rajan R.G. and Zingales L.: What do We Know about Capital Structure? "Journal of Finance" 1995, Vol. 50, No. 5.
  21. Stulz R.: Managerial Control of Voting Rights: Financing Policies and the Market for Managerial Control. "Journal of Financial Economics" 1988, Vol. 20.
  22. Zwiebel J.: Dynamic Capital Structure under Managerial Entrenchment. "The American Economic Review" 1996, Vol. 86, No. 5.
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Język
eng
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