|
Archive@NYU >
Stern School of Business >
Finance Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26911
|
| Title: | Financing Innovations and Capital Structure Choices |
| Authors: | Damodaran, Aswath |
| Issue Date: | 1999 |
| Series/Report no.: | FIN-99-020 |
| Abstract: | The last two decades have seen a stream of innovation in financial
markets, especially in the corporate bond arena. Some of these
innovations were designed to give firms more flexibility in designing
cash flows on borrowings, allowing them to match up cash flows on
financing more closely to cash flows on assets, thus increasing their
debt capacity. These changes have been for the most part good news for
corporate treasurers, but the relentless torrent of innovation has also
resulted in some firms issuing these new and more complex securities for
the wrong reasons. Some have done so to keep up with other firms in
their peer group, and other to take advantage of loopholes in the way
ratings agencies and regulatory agencies define debt and equity. In this
context, it is worth noting that as corporate bonds have become more
complex, investment bankers once more become indispensable to the
process, proving both pricing and selling support. It is important that
firms recognize when complexity serves their interests, and when it can
end up hurting them. |
| URI: | http://hdl.handle.net/2451/26911 |
| Appears in Collections: | Finance Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
