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Keywords:Corporations - Finance 

Conference Paper
The changing nature of debt and equity; a legal perspective

Conference Series ; [Proceedings] , Volume 33 , Pages 49-79

Journal Article
Are the distinctions between debt and equity disappearing? An overview

uring the 1980s, the proportion of business assets financed by debt exceeded that of any other period since World War II. The characteristics of financial securities also changed, as junk bonds, variants of preferred stock, warrants, and other forms of mezzanine financing became more common in credit markets and in private loan contracts. Furthermore, the potential risks and returns offered by all securities have been altered as otherwise familiar financial instruments increasingly contain novel options. ; These innovations have challenged the traditional financial and legal distinctions ...
New England Economic Review , Issue Mar , Pages 3-10

Journal Article
Is leverage a tax dodge--or not?

In passing the Tax Reform Act of 1986, policymakers wanted to ensure that corporations would pay their fair share of tax. Congress broadened the corporate tax base, rescinded the investment tax credit, and instituted a new minimum tax. The issue of adequate tax payments has not gone away, however, because corporations have been taking larger interest deductions as a result of having substituted debt for equity on their balance sheets. ; This study begins by measuring the aggregate tax consequences of corporate leverage decisions. It also examines the tax implications of recent transactions in ...
New England Economic Review , Issue Mar , Pages 11-32

Journal Article
The case for junk bonds

An important financial innovation of the 1980s was the emergence of original-issue junk bonds, securities of below investment grade with high initial yields to maturity. Prior to the 1980s, firms that did not qualify as investment-grade borrowers relied almost exclusively on short-term bank loans for debt financing. Now many such enterprises can obtain long-term financing in national credit markets. ; This article shows that junk bonds are a natural extension of the disintermediation occurring in other financial markets. The author argues that regulating junk bonds alone will not prevent ...
New England Economic Review , Issue May , Pages 40-49

Journal Article
Capital costs, industrial mix, and the composition of business investment

The composition of business investment in the United States changed dramatically during the 1980s. Workplaces were transformed as a result of investments in information processing equipment such as computers, fax machines, copiers, and sophisticated telephones. Businesses built new office towers and shopping malls, but few industrial facilities. ; This article considers the extent to which changes in the cost of capital can account for these shifts. A number of developments occurred in the 1980s that affected the cost of capital more for some industries and assets than others. It is well ...
New England Economic Review , Issue Jan , Pages 67-92

Journal Article
A panel study of investment: sales, cash flow, the cost of capital, and leverage

This article compares the investment spending for each of 396 corporations during the late 1980s and early 1990s to projections of their spending derived from several basic models of investment. According to these models, capital spending, on average, adheres closely to output, profits, and the cost of capital. The pattern of average forecast errors derived from the statistical models does not correspond very closely to measures of indebtedness, liquidity, size, or type of business. It is not surprising that these variables should influence capital spending so little, once the general ...
New England Economic Review , Issue Jan , Pages 9-30

Journal Article
The roles of debt and equity in financing corporate investments

New England Economic Review , Issue Jul , Pages 25-48

The Federal Reserve's liquidity facilities

Remarks at the Vanderbilt University Conference on Financial Markets and Financial Policy Honoring Dewey Daane, Nashville, Tennessee.
Speech , Paper 7

Risk governance: appetite, culture and the limits of limits

Remarks at the Risk USA 2012 Conference, New York City.
Speech , Paper 91

When is there a strong transfer risk from the sovereigns to the corporates? Property rights gaps and CDS spreads

When a sovereign faces the risk of debt default, it may be tempted to expropriate the private sector. This may be one reason why international investment in private companies has to take into account the sovereign risk. But the likelihood of sovereign risk transferring to corporates and increasing their risk of default may be mitigated by legal institutions that provide strong property rights protection. Using a novel credit default swaps (CDS) data set covering government and corporate entities across thirty countries, we study both the average strength of the transfer risks and the role of ...
Staff Reports , Paper 579



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