Download e-book for iPad: Corporate Financial Decisions and Market Value: Studies on by Giovanni Marseguerra

By Giovanni Marseguerra

ISBN-10: 3642470106

ISBN-13: 9783642470103

ISBN-10: 3790810479

ISBN-13: 9783790810479

How do managers of a company make a choice from substitute finan­ cial regulations? Can the alternative of a selected monetary coverage have an effect on the worth of the enterprise? because the early Nineteen Sixties, the talk on those questions has been vigorous and fascinating as economists have inves­ tigated the impact at the price of the enterprise of stress-free some of the assumptions within the celebrated Modigliani-Miller thought. additional­ extra, whether we persist with the MM-assumptions (that is, we imagine ideal and whole capital markets, no taxes and symmetric information), and we as a result recognize that in basic terms optimally selected investments confirm firm's worth, one other attention-grabbing query arises: How does the constitution of possession impact funding de­ cisions (and, in flip, values)? This examine monograph makes an attempt to investigate many of the concerns taken with this debate. It belongs to the realm of mathematical economics and is meant to attract mathematical economists in addition to economists and mathemati­ cians. it truly is intended to accommodate economically correct difficulties in a mathematically sufficient method. to make a decision even if it succeeds during this activity, it really is as much as the reader. i'm tremendously indebted to Dr. Margaret Bray for her supervi­ sion of my PhD thesis in Economics on the London tuition of Eco­ nomics from which this e-book resulted. She helped me as good friend and adviser via many struggles within the final 3 years and invested a large amount of labor during this thesis.

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Extra info for Corporate Financial Decisions and Market Value: Studies on Dividend Policy, Price Volatility, and Ownership Structure

Example text

As far as the interpretation of the available empirical evidence is concerned, in his 1970 paper Fama concluded that the evidence strongly but non unanimously supported market efficiency. However, towards the end of the Seventies, a series of papers by Robert Shiller (1979, 1981) and Stephen LeRoy and Richard Porter (1981) put into question the efficiency of the markets. From their analysis, largely based upon the variance bounds inequality, asset prices appeared to be far more volatile than is consistent with the efficient markets model.

We now compare the equations just derived with the analogous expressions obtained in the previous Chapter. e. 13). On the other hand, when ~ > 0, for each t and so, as expected, the public information reduces the market's uncertainty on at. 6. e. how the information voluntarily released by the firm reduces the amount of information inferred through the dividend figures. 7) For any given (and fixed) period t, Ft(~) is indicative of the reduction in the market's uncertainty subsequent to a dividend announcement.

3 Challenges to Rational Expectations The asset pricing models described in the previous sections are all based on the Rational Expectations Equilibrium conceptualization. Indeed, during the last three decades the Theory of Rational Expectations has been the dominant doctrine employed in the construction of equilibrium models of asset prices and returns. The idea of Rational Expectations has two components: first, that each person's behaviour can be described as the outcome of maximizing an objective function subject to perceived constraints; and, second, that the constraints perceived by everybody in the system are mutually consistent (Sargent, 1993).

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Corporate Financial Decisions and Market Value: Studies on Dividend Policy, Price Volatility, and Ownership Structure by Giovanni Marseguerra


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