公司理财罗斯英文原书第九版第十七章ppt课件.ppt

CapitalStructure LimitstotheUseofDebt Chapter17 Copyright 2010bytheMcGraw HillCompanies Inc Allrightsreserved McGraw Hill Irwin KeyConceptsandSkills DefinethecostsassociatedwithbankruptcyUnderstandthetheoriesthataddressthelevelofdebtafirmcarriesTradeoffSignalingAgencyCostPeckingOrderKnowrealworldfactorsthataffectthedebttoequityratio ChapterOutline 17 1CostsofFinancialDistress17 2DescriptionofFinancialDistressCosts17 3CanCostsofDebtBeReduced 17 4IntegrationofTaxEffectsandFinancialDistressCosts17 5Signaling17 6Shirking Perquisites andBadInvestments ANoteonAgencyCostofEquity17 7ThePecking OrderTheory17 8GrowthandtheDebt EquityRatio17 9PersonalTaxes17 10HowFirmsEstablishCapitalStructure 17 1CostsofFinancialDistress BankruptcyriskversusbankruptcycostThepossibilityofbankruptcyhasanegativeeffectonthevalueofthefirm However itisnottheriskofbankruptcyitselfthatlowersvalue Rather itisthecostsassociatedwithbankruptcy Itisthestockholderswhobearthesecosts 17 2DescriptionofFinancialDistressCosts DirectCostsLegalandadministrativecostsIndirectCostsImpairedabilitytoconductbusiness e g lostsales AgencyCostsSelfishStrategy1 IncentivetotakelargerisksSelfishStrategy2 IncentivetowardunderinvestmentSelfishStrategy3 Milkingtheproperty Example CompanyinDistress AssetsBVMVLiabilitiesBVMVCash 200 200LTbonds 300FixedAsset 400 0Equity 300Total 600 200Total 600 200Whathappensifthefirmisliquidatedtoday Thebondholdersget 200 theshareholdersgetnothing 200 0 SelfishStrategy1 TakeRisks TheGambleProbabilityPayoffWinBig10 1 000LoseBig90 0Costofinvestmentis 200 allthefirm scash Requiredreturnis50 ExpectedCFfromtheGamble 1000 0 10 0 100 NPV 133 SelfishStrategy1 TakeRisks ExpectedCFfromtheGambleToBondholders 300 0 10 0 30ToStockholders 1000 300 0 10 0 70PVofBondsWithouttheGamble 200PVofStocksWithouttheGamble 0 SelfishStrategy2 Underinvestment Consideragovernment sponsoredprojectthatguarantees 350inoneperiod Costofinvestmentis 300 thefirmonlyhas 200now sothestockholderswillhavetosupplyanadditional 100tofinancetheproject Requiredreturnis10 Shouldweacceptorreject NPV 18 18 SelfishStrategy2 Underinvestment ExpectedCFfromthegovernmentsponsoredproject ToBondholder 300ToStockholder 350 300 50PVofBondsWithouttheProject 200PVofStocksWithouttheProject 0 100 SelfishStrategy3 MilkingtheProperty LiquidatingdividendsSupposeourfirmpaidouta 200dividendtotheshareholders Thisleavesthefirminsolvent withnothingforthebondholders butplentyfortheformershareholders Suchtacticsoftenviolatebondindentures Increaseperquisitestoshareholdersand ormanagement 17 3CanCostsofDebtBeReduced ProtectiveCovenantsDebtConsolidation Ifweminimizethenumberofparties contractingcostsfall 17 4TaxEffectsandFinancialDistress Thereisatrade offbetweenthetaxadvantageofdebtandthecostsoffinancialdistress Itisdifficulttoexpressthiswithapreciseandrigorousformula TaxEffectsandFinancialDistress Debt B Valueoffirm V 0 Presentvalueoftaxshieldondebt Presentvalueoffinancialdistresscosts ValueoffirmunderMMwithcorporatetaxesanddebt VL VU TCB V Actualvalueoffirm VU Valueoffirmwithnodebt B Maximumfirmvalue Optimalamountofdebt ThePieModelRevisited Taxesandbankruptcycostscanbeviewedasjustanotherclaimonthecashflowsofthefirm LetGandLstandforpaymentstothegovernmentandbankruptcylawyers respectively VT S B G LTheessenceoftheMcapitalstructurejustslicesthepie S G B L 17 5Signaling Thefirm scapitalstructureisoptimizedwherethemarginalsubsidytodebtequalsthemarginalcost Investorsviewdebtasasignaloffirmvalue Firmswithlowanticipatedprofitswilltakeonalowlevelofdebt Firmswithhighanticipatedprofitswilltakeonahighlevelofdebt Amanagerthattakesonmoredebtthanisoptimalinordertofoolinvestorswillpaythecostinthelongrun 17 6AgencyCostofEquity Anindividualwillworkharderforafirmifheisoneoftheownersthanifheisoneofthe hiredhelp Whilemanagersmayhavemotivetopartakeinperquisites theyalsoneedopportunity Freecashflowprovidesthisopportunity Thefreecashflowhypothesissaysthatanincreaseindividendsshouldbenefitthestockholdersbyreducingtheabilityofmanagerstopursuewastefulactivities Thefreecashflowhypothesisalsoarguesthatanincreaseindebtwillreducetheabilityofmanagerstopursuewastefulactivitiesmoreeffectivelythandividendincreases 17 7ThePecking OrderTheory Theorystatingthatfirmsprefertoissuedebtratherthanequityifinternalfinancingisinsufficient Rule1UseinternalfinancingfirstRule2Issuedebtnext newequitylastThepecking ordertheoryisatoddswiththetradeofftheory ThereisnotargetD EratioProfitablefirmsuselessdebtCompanieslikefinancialslack 17 8GrowthandtheDebt EquityRatio Growthimpliessignificantequityfinancing eveninaworldwithlowbankruptcycosts Thus high growthfirmswillhavelowerdebtratiosthanlow growthfirms Growthisanessentialfeatureoftherealworld Asaresult 100 debtfinancingissub optimal 17 9PersonalTaxes Individuals inadditiontothecorporation mustpaytaxes Thus personaltaxesmustbeconsideredindeterminingtheoptimalcapitalstructure PersonalTaxes Dividendsfacedoubletaxation firmandshareholder whichsuggestsastockholderreceivesthenetamount 1 TC x 1 TS Interestpaymentsareonlytaxedattheindividuallevelsincetheyaretaxdeductiblebythecorporation sothebondholderreceives 1 TB PersonalTaxes IfTS TBthenthefirmshouldbefinancedprimarilybydebt avoidingdoubletax Thefirmisindifferentbetweendebtandequitywhen 1 TC x 1 TS 1 TB 17 10HowFirmsEstablishCapitalStructure MostcorporationshavelowDebt Assetratios Changesinfinancialleverageaffectfirmvalue Stockpriceincreaseswithleverageandvice versa thisisconsistentwithM Mwithtaxes Anotherinterpretationisthatfirmssignalgoodnewswhentheyleverup Therearedifferencesincapitalstructureacrossindustries ThereisevidencethatfirmsbehaveasiftheyhadatargetDebt Equityratio FactorsinTargetD ERatio TaxesSinceinterestistaxdeductible hig