Questions tagged [corporate-finance]

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2
votes
1answer
31 views

Is there an equilibrium between privately owned and publicly listed companies?

Private equity funds are increasingly taking formerly public companies off the exchanges. Is there an economic reason for any public companies to exist and what is the equilibrium share of public ...
2
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0answers
75 views

What topics are important to analyse a financial product? [closed]

When reading analysis papers of financial product, derivative or stock, tangible or not, I noticed that a lot of those papers seem to have similar structures. This got me to the question if there ...
4
votes
1answer
95 views

What is the classic paper that derives borrowing constraints from asymmetric information?

In reading the Wikipedia article about the "financial accelerator," I read this Firms’ ability to borrow depends essentially on the market value of their net worth. The reason for this is the ...
2
votes
1answer
200 views

How does the Fama and French 3-factor model explain stock covariance?

Does it at all? If so, how? It is understood that size and value play a role in determining returns and there are proposed explanation those these, but what about covariance?
1
vote
1answer
52 views

Understanding Leveraged Buyout

There is company A, which has Assets = \$100, Equity = \$50, Debt = \$50. I, Ant, found a new company, company B. I personally invest 10 in this company, and I find people who lend me \$50. Assets = \...
1
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0answers
40 views

Evidence of firm borrowing and loans

I'm absolutely not from firm financing and look to read up on the subject, but mostly onto empirical stuff. Standard questions would be: What is the ratio of firms that finance themselves with bank ...
3
votes
2answers
610 views

How do we explain the difference in average leverage between banks and non-financial firms?

I've been reading a little about the capital structure of banks. For example, in this working paper, "Financing as a Supply Chain: The Capital Structure of Banks and Borrowers" by Gornall and ...
2
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1answer
33 views

Ratios to determine company's current purchasing power

what are the parameters which will affect a company ability to buy a new product based on its current financial situation. Is there any metrics or ratios which will tell the current company ...
7
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1answer
962 views

Deriving the Modigliani--Miller Theorem

In the Wikipedia article on the Modigliani--Miller theorem, it states two propositions. (It gives the cases of with and without taxes. Here I'll just focus on the case without taxes.) The first ...
3
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3answers
857 views

Deriving and explaining the weighted cost of capital

The Wikipedia article for the "weighted cost of capital" (WACC) defines the WACC as "the rate that a company is expected to pay on average to all its security holders to finance its assets." What ...