We consider a firm that operates a single plant and has an expansion option to invest in a new plant with convertible debt financing. This conversion feature introduces another complication not only because of the added conversion timing problem (by the bond holder) but also because the equity holder needs to take future conversion into account when evaluating her expansion/financing decision. ...

We explain the puzzle of falling firm leverage during the period of decreasing aggregate volatility from 1970 – 2010 with a simultaneous increase in firm level volatility and varying degrees of firm access to public debt markets. By incorporating friction between public and private debt, a structural model where firms make financing policy decisions in presence of uncertainty can explain a sign...

We study the choice between public and private debt in a firm’s marginal financing decision and its effects on corporate investment. To do so, we build a dynamic model of investment and financing decisions in which firms can choose not only the amount but also the type of debt to issue to finance investment. The paper shows how various firm and industry characteristics, such as liquidation cost...

Crowdfunding is a quickly expanding phenomenon that emerged as an alternative way to finance ventures or individuals about a decade ago. In crowdfunding, individuals or ventures use online platforms to collect funds from a relatively large group of investors [1]. Today, it provides increasing competition for traditional financing agents such as venture capitalists (VCs), business angels (BAs), ...

before making decisions about the investment and financing the companies. it is necessary to know how the value of a company is determined. in this article three valuation methods are discussed: 1) value dirver method. 2) free cash flow method 3) economic value added method. in these methods the factors affecting the value of companies such as operating rate of return, cost of capital. amount o...

We use the staggered introduction of a major financial reporting regulation worldwide as an exogenous shock to the information environment of individual companies and study whether treated firms change financing decisions consistent with the pecking-order theory. Exploiting within country-year variation in firms’ financing frictions, we document that financially constrained firms increase the i...

I study the financing decisions of firms going public. I find that, all else equal, firms that raise more financing are worth more, and I consider potential explanations for this finding. I provide evidence that raising more financing leads to greater investor recognition, as proxied by better underwriting services, greater liquidity, and greater investor interest, and thereby increases firm va...

Ample evidence points to a negative relation between internal funds (profitability) and the demand for external funds (debt issuance). This relation has been interpreted as evidence supporting the pecking order theory. We show, however, that the negative effect of internal funds on the demand for external financing is concentrated among firms that are least likely to face high external financin...