scholarly journals Security Fungibility and the Cost of Capital: Evidence from Global Bonds

2005 ◽  
Vol 40 (4) ◽  
pp. 849-872 ◽  
Author(s):  
Darius P. Miller ◽  
John J. Puthenpurackal
Keyword(s):  
Stock Price ◽  
Cost Of Capital ◽  
Shareholder Wealth ◽  
Cost Of Debt ◽  
Debt Capital ◽  
Time Period ◽  
Stock Price Reaction ◽  
Potential Benefits ◽  
The Cost ◽  
The Impact

AbstractThis paper examines the potential benefits of security fungibility by conducting the first comprehensive analysis of global bonds. Unlike other debt securities, global bonds' fungibility allows them to be placed simultaneously in bond markets around the world; they trade, clear, and settle efficiently within as well as across markets. We test the impact of issuing these securities on firms' cost of capital, issuing costs, liquidity, and shareholder wealth. Using a sample of 230 global bond issues by 94 companies from the U.S. and abroad over the period 1996–2003, we find that firms lower their cost of (debt) capital by issuing these fungible securities. We also document that the stock price reaction to the announcement of global bond issuance is positive and significant, while comparable domestic and eurobond issues over the same time period are associated with insignificant changes in shareholder wealth.

scholarly journals The Impact of Stock Price Crash Risk on the Cost of Capital: Empirical Study from China

2021 ◽  
Vol 3 (2) ◽  
pp. 88-97
Author(s):  
Muhammad Hamza Khan ◽  
Muhammad Rizwan
Keyword(s):  
Information Disclosure ◽  
Stock Price ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Cost Of Debt ◽  
Crash Risk ◽  
Cost Of Equity ◽  
Coefficient Of Skewness ◽  
The Cost ◽  
The Impact

This study analysed the effect of Sock Price Crash Risk (SPCR) on the cost of capital in Chinese listed firms in the Shenzhen stock exchange and the shanghai Stock Exchange. A sample of 290 firms based on the highest value of assets of each firm was used. The cost of capital consists of two factors; the cost of equity (COE) and the cost of debt (COD). The SPCR is measured by using two statistics, one is NCSKEW means the negative coefficient of skewness of the firm-specific weekly returns and the second is DUVOL that means Down to-Up Volatility used to measure the crash likelihood weekly return of firm-specific and used the Modified PEG ratio model of Eston approach to measuring the cost of equity. We used panel data to run the regression model analyses. SPCR was found to have a significantly positive relationship with the cost of equity and cost of debt. Also, the sample was divided into the State-Owned enterprise (SOEs) and Non-State-Owned enterprises (NSOEs) for comparison. The results show that the impact of SPCR on the COE and COD is stronger in SOEs than NSOEs. The regulators need to improve and strengthen the development of laws and regulations related to company information disclosure, to reduce the cost of capital of listed companies and improve the efficiency of financing the Chinese capital market. Companies need to work together to strengthen internal controls, create a good disclosure environment, and prevent the SPCR.

scholarly journals Analysis of the structure and cost of capital in mining enterprises

2017 ◽  
Vol 33 (1) ◽  
pp. 77-92 ◽  
Author(s):  
Robert Ranosz
Keyword(s):  
Capital Structure ◽  
Cost Of Capital ◽  
Cost Of Debt ◽  
Cost Of Equity ◽  
Mining Company ◽  
Optimal Capital Structure ◽  
Mining Companies ◽  
Debt Capital ◽  
Capital Funding ◽  
The Cost

AbstractThis article focuses on the analysis of the structure and cost of capital in mining companies. Proper selection of appropriate levels of equity and debt capital funding of investment has a significant impact on its value. Thus, to maximize the value of the company, the capital structure of the company should be composed to minimize the weighted average cost of capital. T he objective of the article is to present the capital structure of selected Polish and world’s mining companies and estimate their cost of equity and debt capital. In the paper the optimal capital structure for the Polish mining company (KGHM SA) was also estimated. It was assumed that both Polish and world’s mining companies, have no debt exceeding 45% in the financing structure. For the most of analyzed cases, the level of financing with debt capital is in the range between 10% and 35%. T he cost of equity exceeds the cost of debt capital and is in the range between 8% and 20%, while the cost of debt capital reaches the range between 1.9% and 12%. T he analysis of the optimal capital structure determining, performed for the selected mining company, showed that debt capital funding for the company should be in the range between 5.7% and 7.4%.

scholarly journals Mandatory CSR Disclosure, CSR Assurance, and the Cost of Debt Capital: Evidence from Taiwan

2021 ◽  
Vol 13 (4) ◽  
pp. 1768
Author(s):  
Lopin Kuo ◽  
Po-Wen Kuo ◽  
Chun-Chih Chen
Keyword(s):  
Stock Exchange ◽  
Cost Of Debt ◽  
Accounting Firms ◽  
Taiwan Stock Exchange ◽  
Debt Capital ◽  
Big 4 ◽  
Csr Disclosure ◽  
Corporate Social ◽  
The Cost ◽  
The Impact

This study examined the impact of mandatory corporate social responsibility (CSR) disclosure, CSR assurance and the reputation of assurance providers (accounting firms) on the cost of debt capital. Our difference-in-difference research design in conjunction with univariate and multiple regression analysis was assessed using a large sample of firms listed on the Taiwan Stock Exchange and the Taipei Exchange. Our empirical results revealed that mandatory CSR assurance on CSR disclosure provided by accounting firms tended to reduce the cost of debt capital. However, contrary to expectations, the reputation of the accounting firm (Big 4 accounting firms vs. non-Big 4 accounting firms) tasked with providing CSR assurance did not have a significant effect on the cost of debt capital. These results have implications for firms seeking an assurance provider as well as for Big 4 accounting firms. These results also provide specific evidence relevant to government agencies seeking to update policies and extend the scope of mandatory CSR assurance to other environmentally sensitive industries.

International Real Estate Review

2015 ◽  
Vol 18 (3) ◽  
pp. 331-364
Author(s):  
George D. Cashman ◽  
◽  
David M. Harrison ◽  
Hainan Sheng ◽  
◽  
...  
Keyword(s):  
Real Estate ◽  
Cost Of Capital ◽  
Political Risk ◽  
Weighted Average ◽  
Asia Pacific ◽  
Cost Of Debt ◽  
Political Rights ◽  
Equity Financing ◽  
The Cost ◽  
The Impact

This study investigates the impact of political risk on the cost of capital for publicly traded real estate firms. More specifically, by using a sample of 102 REITs and listed property trusts, which hold nearly 6,000 distinct investment properties across the Asia-Pacific region, we find strong empirical evidence that increased exposure to political risk increases both the cost of equity financing of a firm and its weighted average cost of capital. Interestingly, no such linkages are apparent between political risk and the cost of debt of a firm. These empirical results are robust to a variety of alternative measures of political risk, including a: 1) political rights index, 2) political change index, and 3) corruption perceptions index.

scholarly journals Possibility of Applying Economic Value Added in the Capital Market of the Republic of Srpska / Mogućnost Primene Dodate Ekonomske Vrednosti Na Tržištu Kapitala U Republici Srpskoj

2013 ◽  
Vol 10 (2) ◽  
pp. 7-18
Author(s):  
Almir Alihodžić
Keyword(s):  
Cost Of Capital ◽  
Economic Value ◽  
Value Added ◽  
Cost Of Debt ◽  
Economic Value Added ◽  
Cost Of Equity ◽  
Market Index ◽  
Debt Capital ◽  
The Republic ◽  
The Cost

Abstract The efficiency of a management team primarily depends on the level of improvement of enterprise performances, i.e. whether its market value has increased or whether it creates value for shareholders. The accounting net profit can provide a partial answer to this question because it covers only one portion of the cost of capital, i.e. the cost of debt capital, while the price and cost of equity are disregarded. The method of the economic value added takes into account an average cost of capital, i.e. it calculates the total costs of borrowed capital and own capital. This paper explores the possibility to calculate economic value added for an individual share within the share market index of BIRS.

scholarly journals Multinationality, Capital Structure, and Cost of Capital of Non-Financial Firm Listed on Indonesia Stock Exchange

2020 ◽  
Vol 3 (2) ◽  
pp. 146-159
Author(s):  
Rezza Vitriya
Keyword(s):  
Capital Structure ◽  
Multinational Firms ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Cost Of Debt ◽  
Multinational Firm ◽  
Domestic Firms ◽  
The Cost ◽  
The Impact

Multinational firms are firm that do business internationally, the higher degree of multinationality of a firm, they have more ability to get greater funding because there are more chances to get funding from foreign country. Because of that condition, multinational firms have different cost of capital with domestic firms. The main purpose of this study is to understand the impact of degree of multinationality, capital structure, firm size, profitability and growth opportunity to cost of capital. Panel data is used on this research and multiple linear regression analysis is used as analytical model. The result suggest that Indonesia multinational firms have lower cost of capital, cost of equity, and cost of debt than Indonesia domestic firms. The study found that capital structure is negatively related to cost of capital, this means that Indonesia multinational firm use more debt than Indonesia domestic firms, and so lower the cost of debt after tax and hence the cost of capital.

Carbon emissions and the cost of capital: Australian evidence

2014 ◽  
Vol 13 (4) ◽  
pp. 400-420 ◽  
Author(s):  
Yongqing Li ◽  
Ian Eddie ◽  
Jinghui Liu
Keyword(s):  
Carbon Emissions ◽  
Emission Intensity ◽  
Carbon Emission ◽  
Cost Of Capital ◽  
Cost Of Debt ◽  
Emissions Reduction ◽  
Cost Of Equity ◽  
Content Type ◽  
The Cost ◽  
The Impact

Purpose – The purpose of this paper is to investigate the potential impact of the approved Australian carbon emissions reduction plan on the cost of capital and the association between companies’ carbon emission intensity and the cost of capital. Design/methodology/approach – A sample of Australian Stock Exchange 200 (ASX 200)-indexed companies from 2006 to 2010 is used. Hypotheses are tested based on Heckman’s two-stage approach. Three regression models are developed to examine the association between carbon emissions and the cost of capital. Findings – Using a sample of ASX 200-indexed listed companies, the paper finds that the cost of capital, including the cost of debt and the cost of equity, will increase for emissions-liable companies. Results also show that the cost of debt is positively correlated with a company’s emission intensity. However, little evidence supports that the emission intensity affects the cost of equity. Originality/value – As it is evident that the emissions reduction plan will adversely affect corporate entities’ cost of capital, this study suggests that companies, investors and lenders need to include carbon emission in risk analysis. An emissions-liable company should establish strategies to combat the impact of the Plan on rising cost that comes with the enforcement of the Plan. Government assistance is essential in the transitional period.

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