Avoiding Financial Distress in Project Finance: A Case for Implementation of Improved Capital Structure Frameworks

2012 ◽  
Author(s):  
Francois Laurens
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Project Finance

Risk Shifting Through Nonfinancial Contracts: Effects on Loan Spreads and Capital Structure of Project Finance Deals

2008 ◽  
Author(s):  
Stefano Gatti ◽  
Francesco Corielli ◽  
Alessandro Steffanoni
Keyword(s):  
Capital Structure ◽  
Project Finance ◽  
Risk Shifting ◽  
Loan Spreads

Leverage, competition and financial distress hazard: Implications for capital structure in the presence of agency costs

2021 ◽  
pp. 105740
Author(s):  
Mehmet Ugur ◽  
Edna Solomon ◽  
Ayaz Zeynalov
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Agency Costs

scholarly journals STRUKTUR MODAL TERHADAP NILAI PERUSAHAAN

2008 ◽  
Vol 7 (1) ◽  
Author(s):  
Masdar Mas’ud
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Company Value ◽  
Growth Opportunity ◽  
Tax Shields ◽  
Manufacturing Company ◽  
Size Growth ◽  
The Capital Structure

The study attempts to analyze the factors of capital structure determiner and its impact on company value. The research aims at examining and analyzing the effect of profitability, size, growth opportunity, asset structure, cost of financial distress, and tax shields effects as the capital structure determiners on the manufacturing companies registered at Indonesia Stock Exchange. The differences between the factors of capital structure determiners (consisting of profitability, size, growth opportunity, asset structure, cost of financial distress, and tax shields effects) and the value of manufacturing companie registered at Indonesia Stock Exchange. The sample includes 59 companies registered at Indonesia Stock Exchange the data analysis instrument employed was Structural Equation Modeling (SEM) and t-test. The results of the research indicate that the factors of capital structure determiners, which have significant effect on capital structures, are profitability, size, growth opportunity, asset structure and cost of financial distress. The exception may be tax shields effects, which do not give significant effect at all on capital structure. The latter becomes evident because the depreciation and amortization rates of the registered Indonesia manufacturing company do not seem significant to contribute to company cash flow so that it stands out of company debt proportion.The factors of capital structure determiners with significant effect on capital structures involve profitability, size, asset structure, and cost of financial distress and tax shields effects. Size and growth opportunity do not have significant effect on the capital structure because manufacturing companies consider financing their investment using equity financing to deal with little financial risk regardless the size of company. It shows that there is a similarity on these factors of capital structure determiner between manufacturing company registered at Indonesia Stock Exchange the insignificantly defferent determiner factors pertain to growth opportunity, asset structure and company value. Meanwhile, the difference also develops between the factors of capital structure determiner in the manufacturing company registered at Indonesia Stock Exchange. The significantly different determiner factors will be profitability, size, cost of financial distress; tax shields effects and capital structure.

scholarly journals Corporate governance and capital structure in the periods of financial distress. Evidence from Greece

2017 ◽  
Vol 14 (1) ◽  
pp. 254-262 ◽  
Author(s):  
George Kyriazopoulos
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Financial Distress ◽  
Sovereign Debt ◽  
Negative Impact ◽  
Stock Exchange ◽  
Debt Crisis ◽  
Outside Directors ◽  
Listed Firms ◽  
Athens Stock Exchange

This study examines the relationship between corporate governance and capital structure employing data from the Athens Stock Exchange for the period 2005-2014. This period encompasses the sovereign debt crisis erupted in Greece at the end of 2009 and still continues to hit households and businesses alike. The results from the panel regression analysis signify the role of corporate governance structures in determining the capital structure of the Greek listed firms. In particular, the empirical results reveal a negative impact of board size on debt levels, which is weakened during the debt crisis period. In contrast, the presence of outside directors provides the appropriate certification to use more debt. Finally, growth opportunities and profitability are the two firm-specific factors which effect was weakened during the financially-constraint period.

scholarly journals Taxation, Corporate Capital Structure, and Financial Distress

10.3386/w3202 ◽  
1989 ◽  
Author(s):  
Mark Gertler ◽  
R. Glenn Hubbard
Keyword(s):  
Capital Structure ◽  
Financial Distress ◽  
Corporate Capital ◽  
Corporate Capital Structure

Väätsa Agro AS financial distress

2012 ◽  
Vol 2 (8) ◽  
pp. 1-13
Author(s):  
Laivi Laidroo
Keyword(s):  
Capital Structure ◽  
Corporate Finance ◽  
Financial Distress ◽  
Financial Management ◽  
Subject Area ◽  
Financial Situation ◽  
Content Type ◽  
Course Of Action ◽  
Pros And Cons ◽  
Consultancy Firm

Subject area Corporate finance, financial management. Study level/applicability The case is suitable for Master's level corporate finance or financial management courses. Sufficient prior theoretical knowledge of corporate finance concepts is required. Case overview Väätsa Agro AS is an Estonian dairy farming company. Although the company had operated successfully in the past, its ownership changed significantly in 2006 leading to changes in the company's capital structure. Starting from 2008 milk prices on global markets decreased and this trend had also affected the company's profits. As a result of these developments the company's financial situation had deteriorated since 2008 and towards the end of 2009 the company had problems in meeting its obligations. On 1 September 2009 its owners hired a consultancy firm represented by Karl Kukk to tackle the company's problems. Expected learning outcomes The case should help students to: understand the risks of LBOs; understand the importance of an appropriate capital structure of a firm; evaluate a company's financial situation and compare it with competitors; understand the alternatives facing firms in financial distress; and choose the best course of action for a distressed firm considering the pros and cons of each alternative for each stakeholder group. Supplementary materials Teaching notes are available; please consult your librarian for access.

Risk Shifting through Nonfinancial Contracts: Effects on Loan Spreads and Capital Structure of Project Finance Deals

2010 ◽  
Vol 42 (7) ◽  
pp. 1295-1320 ◽  
Author(s):  
FRANCESCO CORIELLI ◽  
STEFANO GATTI ◽  
ALESSANDRO STEFFANONI
Keyword(s):  
Capital Structure ◽  
Project Finance ◽  
Risk Shifting ◽  
Loan Spreads

scholarly journals Economic Value-Added Creation by Optimizing Capital Structure in Project Finance

2020 ◽  
Vol 3 (2) ◽  
pp. 46-60
Author(s):  
Bryan Charisma ◽  
Encep Amir
Keyword(s):  
Capital Structure ◽  
Economic Value ◽  
Balance Sheet ◽  
Weighted Average ◽  
Value Added ◽  
Project Finance ◽  
Economic Value Added ◽  
Operating Profit ◽  
Debt Repayment ◽  
Physical Asset

Infrastructure Projects are large investment by the public and/or private sector that required enormous financial resource commitment to build physical asset and facilities needed for economic development so that the company need project financing to support with. Project finance is based on debt repayment from project companies’ revenue and not on the sponsors or the developer’s balance sheet, so the project companies should assure the cash flow is sufficient for debt repayment and dividend payment. Beside that investors still have to analyze the value created in that project with highest positive Economic Value Added. Net Operating Profit After Tax (NOPAT) need to cover cost of invested capital to create value so that the ratio of NOPAT to total Project Cost (Return on Invested Capital) is should be more than the weighted average cost of capital (WACC). The capital structure doesn’t have an optimum weight and cost as long as the Return on Invested Capital (ROIC) higher than WACC.

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