Bureau of Economic Research, Cambridge, MA 02912, USA (Received 2 August 1999; final version received 10 December 1999) Abstract We survey 392 CFOs about the cost of capital, capital budgeting, and capital structure. Large firms rely heavily on present value techniques and the capital asset pricing model, while small firms are relatively likely to use the payback criterion. A surprising number of firms use firm risk rather than project risk in evaluating new investments. Firms
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functions. These are: a) Investment of Long-term asset-mix decisions These decisions (also referred to as capital budgeting decisions) relates to the allocation of funds among investment projects. They refer to the firm’s decision to commit current funds to the purchase of fixed assets in expectation of future cash inflows from these projects. Investment proposals are evaluated in terms of both risk and expected return. Investment decisions also relates to recommitting funds when an old asset becomes
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the system by which corporations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs. Governance provides the structure through which corporations set and pursue their objectives, while reflecting the
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a legal counselor for DFW, a firm that is interested in venturing in Shanghai, understanding Chinese investment policies are critical in determining the business structure that the company will have, as well as, the various incentives, and the means of resolving disputes should any arise. There are two main types of business structures that can be used in Shanghai; these can be Limited Liability companies and Representative office. The Limited Liability Company is independent legal entities that
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Explaining Basic Accounting Concepts and Business Structures The Hierarchy of Generally Accepted Accounting Principles identifies the sources for the accounting standards and principles. These sources include “FASB Standards, Interpretations, and Staff Positions; APB Opinions; and AICPA Accounting Research Bulletins” (Kieso, Weygandt, & Warfield, 2007, p. 12). When companies prepare financial statements in accordance with GAAP, they sometimes run into situations in which some standards do not
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The key elements in organizational behavior are people, structure, technology and the external elements in which the organization operates. When people join together in an This watermark does not appear in the registered version - http://www.clicktoconvert.com organization to accomplish an objective, some kind of infrastructure is required. People also use technology to help get the job done, so there is an interaction of people, structure and technology. In addition, these elements are influenced
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of a business. Topics include techniques for the valuation of future cash flows and of financial assets such as stocks and bonds; rules for managing cash and allocating capital in the short run and long run while taking account of costs, returns and risks; and the role of financial markets in guiding or facilitating these decisions. After taking this class, you will – I hope – be able to better understand and discuss financial news, know about the central financial aspects of running your own business
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on strong hand’ written by Jonathon Shapiro and published in an August 2011 edition of The Australian Financial Review, discusses how ANZ raised $750 million in hybrid capital (capital combination of debt and equity characteristics) in order to maintain its already strong capital position and balance sheet. ANZ has a Tier 1 capital ratio of 10.6% compared to Westpac, NAB and the Commonwealth Bank of Australia and will only improve with further equity issuance. The ANZ treasurer spoke of the company’s
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Corporate Investment Decision Practices And the Hurdle Rate Premium Puzzle Iwan Meier and Vefa Tarhan1 February 27, 2006 Abstract We survey a cross-section of 127 companies to shed light on various dimensions of the investment decisions. The questions posed by our survey examine the hurdle rates firms use, calculations of project related cashflows, the interaction of cashflows and hurdle rates, and the determinants of firms’ capital structure policies. Unlike previous studies which examine
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relationships with FCX’s management. But the key to their fee bonanza was the risky commitment to provide bridge loans if placement was not possible in the capital markets. 2. What was the role of the leveraged finance group at JPMorgan and why was its involvement important to the acquisition? The leveraged finance group was responsible for making the bridge financing commitment on behalf of JPMorgan that allowed FCX to make a firm bid for Phelps Dodge. To ensure that the M&A transaction could
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