Constant Leverage And Constant Cost Of Capital: A Common Knowledge Half-Truth

ABSTRACT While researchers and practitioners alike estimate firms' exposures to systematic risk factors, the disclosure literature typically assumes that exposures are common knowledge. We develop a model where the firm's exposure to a factor is unknown, and analyze the effects of factor-exposure uncertainty on share price and the effects of disclosure about the exposure. We find that: (1) factor-exposure uncertainty introduces skewness and excess kurtosis in the cash flow distribution relative to the commonly used normal distribution; (2) risk-factor disclosure affects all moments of that distribution; and (3) the pricing of higher moments affects the price response of disclosure and the incentives to disclose. For example, factor-exposure uncertainty may actually increase price when the uncertainty implies positive skewness in the cash flow distribution. Hence, a reduction in uncertainty through disclosure may increase cost of capital. We also extend our model to multiple firms and show that factor-exposure uncertainty manifests as uncertainty about a firm's CAPM beta. JEL Classifications: G12; M41.

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Response of The Cost of Equity To Leverage: An Alternative Perspective

Journal of Business Strategies ◽

10.54155/jbs.32.2.110-138 ◽

1970 ◽

Vol 32 (2) ◽

pp. 110-138

Author(s):

Glenn Pettengill ◽

Diane Lander

Keyword(s):

Cost Of Capital ◽

Cost Of Equity ◽

Bankruptcy Costs ◽

Alternative Perspective ◽

Standard Textbook ◽

Constant Cost ◽

Equity Ratio ◽

The Cost

In this paper we examine the change in a corporation’s cost of equity asthe corporation increases leverage. Standard textbook treatments present the wellknownModigliani-Miller hypothesis that the cost of leverage increases linearly withincreases in the debt-to-equity ratio in keeping with a constant cost of capital for thefirm. Less frequently, textbooks present the Modigliani-Miller argument that, if thecost of debt rises with high levels of leverage, the cost of equity will increase at adecreasing rate or even decline in order to keep the overall cost of capital constant.Standard textbook presentations continue with additional discussions concerningtax effects and bankruptcy costs but without mention of the cost of equity. Thesepresentations leave the impression that the cost of equity remains as presentedin the Modigliani-Miller framework. In this paper we present theoretical andempirical arguments in support of our claim that the cost of equity increases slowlywith moderate increases in debt but increases dramatically as leverage increasessufficiently to cause equity investors to fear bankruptcy.

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Ultrastructural features of prognostic significance in human oral cancer

Proceedings, annual meeting, Electron Microscopy Society of America ◽

10.1017/s0424820100123490 ◽

1992 ◽

Vol 50 (1) ◽

pp. 618-619

Author(s):

Karvita B. Ahluwalia ◽

Nidhi Sharma

Keyword(s):

Oral Cancer ◽

Squamous Cell ◽

Common Knowledge ◽

Prognostic Significance ◽

Growth Control ◽

Terminal Differentiation ◽

Squamous Cell Carcinomas ◽

Effective Therapy ◽

Invasive Potential ◽

Biological Behaviour

It is common knowledge that apparently similar tumors often show different responses to therapy. This experience has generated the idea that histologically similar tumors could have biologically distinct behaviour. The development of effective therapy therefore, has the explicit challenge of understanding biological behaviour of a tumor. The question is which parameters in a tumor could relate to its biological behaviour ? It is now recognised that the development of malignancy requires an alteration in the program of terminal differentiation in addition to aberrant growth control. In this study therefore, ultrastructural markers that relate to defective terminal differentiation and possibly invasive potential of cells have been identified in human oral leukoplakias, erythroleukoplakias and squamous cell carcinomas of the tongue.

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Children's and Adults' Common Knowledge, Riddle Responses and Pollution Solutions

PsycEXTRA Dataset ◽

10.1037/e566842012-464 ◽

2010 ◽

Author(s):

Helen A. Swanson ◽

Joshua Ebert ◽

Lacey Seefeldt

Keyword(s):

Common Knowledge

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Formation Of An Estimate For A State Contract With A Firm Price In The Construction Sector

Promyshlennoe i Grazhdanskoe Stroitel stvo ◽

10.33622/0869-7019.2020.03.47-57 ◽

2020 ◽

pp. 47-57

Keyword(s):

Construction Projects ◽

Cost Of Capital ◽

Federal Budget ◽

The State ◽

Structural Elements ◽

Construction Sector ◽

Construction Process ◽

Practical Application ◽

Stage Of Development ◽

Capital Construction

The issues of determining the estimated cost of capital construction projects with the involvement of Federal budget funds at the stage of development of project documentation, during verification of the accuracy of determining the estimated cost and the initial (maximum) contract price are considered. On the basis of the assessment of amendments to urban planning legislation for the purpose of implementing a state contract by the contractor ( based on the results of competitive procedures or without competitive procedures by decision of state authorities), the procedure for forming the estimate as part of a state (municipal) contract, the price of which is firm, is presented. For the purpose of mutual settlements between the customer and the contractor for the work performed, the formation of primary accounting documentation, as well as for checking the work performed by regulatory authorities, an example of drawing up an estimate of the state (municipal) contract on the basis of grouping costs according to structural elements and complexes of work is given. The result of the research conducted was the development of regulations and the formation of criteria for their practical application by state bodies, institutions, organizations and other participants in the investment-construction process, as well as recipients of budget funds, who perform the functions of the state (municipal) customer, developer and technical customer.

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Josiah Hale, M.D., Louisiana botanist, Rafinesque's pupil

Journal of the Society for the Bibliography of Natural History ◽

10.3366/jsbnh.1977.8.3.235 ◽

1977 ◽

Vol 8 (3) ◽

pp. 235-243 ◽

Cited By ~ 1

Author(s):

JOSEPH EWAN

Keyword(s):

Common Knowledge

"They pass", writes Professor Samuel Wood Geiser, "these naturalists of the frontier, across the stage of history — some of them men of brain and heart and honor, others men of whom we cannot speak with admiration. They are not all to be gauged by the same standards: their environments, diverse and not always favorable, helped to make them all. But they were one in their devotion to the advancement of our common knowledge."

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Tread Depth Effects on Tire Rolling Resistance

Tire Science and Technology ◽

10.2346/1.2135235 ◽

2001 ◽

Vol 29 (3) ◽

pp. 134-154 ◽

Cited By ~ 5

Author(s):

J. R. Luchini ◽

M. M. Motil ◽

W. V. Mars

Keyword(s):

Finite Element Analysis ◽

Common Knowledge ◽

Rolling Resistance ◽

Test Method ◽

Tire Model ◽

Element Analysis ◽

Truck Tires ◽

The Finite Element Analysis ◽

Equilibrium Test ◽

Depth Effects

Abstract This paper discusses the measurement and modeling of tire rolling resistance for a group of radial medium truck tires. The tires were subjected to tread depth modifications by “buffing” the tread surface. The experimental work used the equilibrium test method of SAE J-1269. The finite element analysis (FEA) tire model for tire rolling resistance has been previously presented. The results of the testing showed changes in rolling resistance as a function of tread depth that were inconsistent between tires. Several observations were also inconsistent with published information and common knowledge. Several mechanisms were proposed to explain the results. Additional experiments and models were used to evaluate the mechanisms. Mechanisms that were examined included tire age, surface texture, and tire shape. An explanation based on buffed tread radius, and the resulting changes in footprint stresses, is proposed that explains the observed experimental changes in rolling resistance with tread depth.

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El patriacado y la estructura social de la vida cotidiana

Contrastes Revista Internacional de Filosofía ◽

10.24310/contrastescontrastes.v0i0.1632 ◽

1970 ◽

Author(s):

Marta Postigo Asenjo

Keyword(s):

Labor Market ◽

Public Sphere ◽

Civic Education ◽

Common Knowledge ◽

Judicial System ◽

The Public ◽

El Sistema ◽

The Common ◽

The Public Sphere ◽

Ways Of Life

RESUMENEl sistema patriarcal no afecta exclusivamente al poder político y judicial, sino que afecta a la estructura interna de la sociedad, la identidad y las formas de vida de los individuos que en ella viven. Para comprender mejor como condiciona el sistema patriarcal las formas de vida y la visión que tienen los individuos de la realidad social, hemos de analizar el modo en que se extiende al orden institucional y lo determina mediante "tipificaciones" de hechos y de personas y mediante roles concretos, esteoreotipaciones sexiuales que obstaculizan el acceso a la esfera pública de la mujer, así como su reinserción en el mercado laboral, en suma, todo aquello que afecta al conocimiento común que comparten los miembros de una comunidad. El cambio hacia una mayor igualdad y una real democracia paritaria y compartida no es posible sin una paulatina educación y concienciación de la sociedad en su conjunto.PALABRAS CLAVEPATRIARCADO-TIPIFICACIÓN SOCIAL-IGUALDAD DE GÉNEROABSTRACTPatriarchalism is not only present in politics and the judicial system. It also affects the internal structure of society, above all the life and identitý of individuals. To understand better how it conditions their ways of life and the vision the individuals have of social reality, we should study how patriarchalism r3eaches the system of institutions and how this becomes determined by "typifications" of facts and people, and by certain roles or sexual stereotypes that hinder the access of women both to the public sphere and to tha labor market. It sum, everything that concerns the common knowledge that the members of a community share. The move towards more equality and towards a more egalitarian democracy heavily depends on the spread of civic education to the entire society.KEYWORDSPATRIARCHALISM-SOCIAL TYPIFICATION-GENDER EQUALITY

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