金融Essay模板：Essay on Capital Structure in Modern Day Businesses
本文是金融專業的Essay范例，題目是“Essay on Capital Structure in Modern Day Businesses（論現代企業的資本結構）”，現代資本結構是基于莫迪利阿尼和米勒(MM)定理。它指出，在一個沒有稅收、破產成本和不對稱信息的市場中，在一個有效的市場中，公司的整體市場價值不會受到融資方式的影響。這就形成了權衡理論和啄序理論的基礎。
由于沒有完美的市場條件，每個方面都將根據資本結構的方式產生影響。有兩種理論背后的結構應該控制,啄序理論,它是由斯圖爾特·c·邁爾斯和尼古拉斯Majluf 1984年[1],并權衡理論,被認為是這方面的先驅回到克勞斯和Litzenberger但許多包括Modilgliani自己理解的理論發展。
The way we think about capital structure in the modern day is based around the Modigliani and Miller(MM) theorem. It states that a market absent of tax, bankruptcy costs and asymmetric information, and in an efficient market, a company’s overall market value will not be affected depending on how it is financed. This then forms the basis of the trade off theory and the pecking order theory. As there is no perfect market conditions each aspect will have an effect based on the way the capital is structured. There are two theories behind the way the structure should be controlled, the pecking order theory, which was created by Stewart C. Myers and Nicolas Majluf in 1984[1], and the trade off theory, which was considered to be pioneered by back to Kraus and Litzenberger but many including Modilgliani himself are understood to have developed the theory.
The way that a company’s finances are structured is particularly important in light of the latest world recession. As seen in the Asian crisis in 1997 where all share markets became very volatile. It is not that capital structure has a large affect on a causing financial crisis, but rather that it will decide the impact on a firm during the financial crisis. This is relevant especially in the banking industry where assets are put under severe strain during a crisis [2].
鑒于最近的全球經濟衰退，一家公司的財務結構方式尤其重要。正如我們在1997年亞洲金融危機中看到的那樣，當時所有的股票市場都變得非常不穩定。并不是說資本結構對金融危機的起因有很大的影響，而是它將決定金融危機期間對企業的影響。這在銀行業尤其重要，因為在危機期間，銀行業的資產受到了嚴重的壓力。
I have chosen to approach the issue by setting out the basics of the theory’s and their respective advantages and disadvantages, along with the premise behind why they are valid in capital structure. It will be backed by empirical evidence conducted from studies to back up my proposals.
Pecking order theory suggests that companies should prioritise the way in which they raise finance. The pecking order relates to the hierarchy that the company follows, from the most appropriate to the least. The pecking order claims that the least preferred method is through equity financing. Rather to initially use internal sources and then issue debt until it is no longer suitable. The basic idea was developed around the original the Modigliani and Miller theorem. In contrast though a true market does not poses the same attributes as the MM theory. From the original paper by Myers and Majluf (1984) [4] developed a model that showed that capital structure was designed to limit the inefficiencies of caused by informational asymmetries. The informational asymmetries states that a manager will know more about the assets of a firm and their future growth prospects than the average outside investor, causing inequality in the market.
啄序理論認為，公司應該優先考慮融資方式。等級順序與公司遵循的等級制度有關，從最合適的到最不合適的。按順序排列，最不受歡迎的方法是通過股權融資。而不是最初利用內部資源，然后發行債務，直到不再合適。它的基本思想是圍繞莫迪利阿尼和米勒定理發展起來的。相比之下，一個真正的市場并不具有MM理論所具有的屬性。從Myers和Majluf(1984)的原始論文中，[4]開發了一個模型，表明資本結構的設計是為了限制由信息不對稱引起的低效率。信息不對稱是指管理者比一般外部投資者更了解公司的資產及其未來增長前景，從而導致市場不平等。
From Murray Z. Frank Vidhan K. Goyal (2002) [6] I have established that though debt on the other hand is subject to minor adverse problems, equity causes a major adverse selection problem. For an outside investor, equity is construed to be riskier than debt. Equity finance premiums have the higher negative consequence on the firm, and as it is virtually impossible to finance fully from Therefore, an outside investor will demand a higher rate of return on equity than on debt. Thus leading to the pecking order of finance structure.
To confirm the theory on asymmetric information, Viet Anh Dang [5] put forward that this model leads to a potential unfavourable selection problem due to the risk of the method of finance. Resulting in the fact that, investors will predict a decision not to issue securities to signal good news and vice versa. This problem leads to a pooling market equilibrium in which new shares can only be offered at a marked-down price.
為了證實信息不對稱理論，Viet Anh Dang[5]提出，由于金融方法的風險，該模型導致了潛在的不利選擇問題。結果，投資者會預測一個決定，不發行證券的信號是好消息，反之亦然。這個問題導致了一種集中市場均衡，在這種均衡中，新股只能以較低的價格出售。
The empirical specification for the test takes the following form:
flow is entirely offset by the change in debt.
The financing choice should be in favour of the financing instruments that are less risk and less sensitive to mis-pricing and valuation errors. Where again we find that equity is the most prone to inaccuracy followed by debt and finally internal sources which are absent of mistakes in valuation.
The earliest accredited study that found empirical evidence supporting all these theories was conducted by Baskin. J (1989)[6], this then led to further studies, though these have resulted in conflicting evidence as to the legitimacy of the theory. In the original Myers & Majluf (1984)[4] study the table below lists how firms were financially structured
最早得到認可的研究發現了支持所有這些理論的經驗證據是由巴斯金進行的。J(1989)[6]，這導致了進一步的研究，盡管這些導致了沖突的證據，作為合法性的理論。在最初的Myers & Majluf(1984)[4]研究中，下表列出了公司的財務結構
It shows that firms had adopted the pecking order method to a degree by selecting to finance internally first followed by debt then last resort equity finance, but as this is a summary of countries each individual firm will differ. This is the exact problem with the pecking order theory, it isn’t individually tailored to best suit each business. This was proved by the table below
Ziad Zurigat’s (March 2009) study of the differing effect pecking order theory had on small and large firms. His findings showed, the estimated coefficients are lower for PDEF (0.421 and 0.592) for small and large firms respectively) than for
NDEF (0.569 and 0.648), implying that small and large Jordanian firms are less sensitive in increasing debt for financing than in reducing debt for soaking up surplus. However, as cleared, small Jordanian firms are less sensitive than large ones in increasing debt to finance their positive financial deficit and retiring debt to soak up surplus.
NDEF(0.569和0.648)，這意味著小型和大型約旦公司在增加債務融資方面比在減少債務以吸收盈余方面更不敏感。然而，正如清算的那樣，小約旦公司在增加債務以資助其正財政赤字和償還債務以吸收盈余方面不像大公司那么敏感。
The Trade-Off Theory of Capital Structure employs to the concept that a firm is able to manipulate the levels of debt and equity finance by balancing the costs and benefits to be most advantageously structured. As mentioned in the introduction it goes back to Kraus and Litzenberger who considered a balance between the dead-weight costs of bankruptcy and the tax saving benefits of debt.
To ensure that the debt is balanced the firm will consider the marginal benefits and the marginal costs, as the more debt is taken on the marginal benefit will decrease while the marginal cost will increase. When the marginal benefit is equal to the marginal and the firm’s value is optimised, there will be a trade off as to the point that debt becomes more detrimental than equity which will form the d/e ratio for the firm.
為了保證債務的平衡，企業會考慮邊際效益和邊際成本，因為在邊際效益上承擔的債務越多，邊際效益就會減少，而邊際成本就會增加。當邊際效益等于邊際效益，公司的價值被優化時，將會有一個權衡點，即債務變得比股權更有害，這將形成公司的d/e比率。
As stated before under a perfect market condition with no tax the finance structure is irrelevant, but as tax comes into play equity is again favoured in the trade off theory, this is because interest on debt reduces the tax liability of a firm in turn increasing the profits, this is called a tax shield. The cost of financial distress should equal the tax shield at the point of equilibrium.
The custom economic model used when interpreting the trade-off theory is the partial adjustment model (Jalilvand and Harris, 1984; Shyam-Sunder and Myers, 1999; Ozkan, 2001 and Fama and French, 2002), which is made up of two parts; a static part to describe how the ideal amount is determined and the dynamic partial adjustment process:
Where, yt = a firm’s financial ratio in period t,
yt-l = a firm’s financial ratio in period t-1,
yt*= the target level of a particular ratio
?? = the speed of adjustment coefficient i.e. how fast the firm returns to its target debt ratio3
Empirical Evidence supporting the trade off theory
Here we can see that from the research done in the paper the table is drawn from, it has been found that there are some explanatory variables which do not act as expected. Although this may be interpreted as the trade off model being inaccurate, there are still factors which do affect the businesses total debt as expected. The most important factors drawn from the table above are the business size, total debt ratio, effective tax rate and the non-debt tax shields. The reason why explanatory variables such as growth opportunities do not act as expected may be due to the differing size of businesses examined; splitting the data in to business size may be advantageous here.
在這里我們可以看到，從本文所做的研究得出的表格，已經發現有一些解釋變量并沒有像預期的那樣發揮作用。雖然這可能被解釋為權衡模型是不準確的，但仍有一些因素影響企業的總債務預期。從上表中得出的最重要的因素是企業規模、總負債比率、有效稅率和非債務稅盾。增長機會等解釋變量的作用不像預期的那樣，可能是因為所考察的企業規模不同;在這里，根據業務規模拆分數據可能是有利的。
The benefit of the trade off theory is that it is unique to each company’s situation, for example a company with safe, tangible assets that also generate high levels of income would likely seek a high debt target ratio as to fully Companies with safe, tangible assets and plenty of taxable income to shield ought to have high target ratio to fully utilise the tax shield. In the opposite direct a company that is Unprofitable with risky, intangible assets will usually rely on equity finance as it becomes the less risky option. As the uncertainty surround its income could make the tax shield non existent
權衡理論的好處是，它是獨一無二的每個公司的情況，例如，一個公司的安全，有形資產，并產生高水平的收入，可能會尋求一個高的債務目標比率，與充分的公司，安全，有形資產和大量應稅收入的遮擋應具有較高的目標率，以充分利用稅收遮擋。相反，如果一家公司不盈利且有風險，無形資產通常會依靠股權融資，因為股權融資是風險較小的選擇。由于圍繞其收入的不確定性，可能使稅收保護不復存在
One key flaw that was not in the original Modigliani and Miller (1963) study is that of the effect on personal income tax. Miller (1977) took this into account in his study and proved that in fact the total tax saving at the point of equilibrium was zero when income tax increase was applied to the tax shield. The following equations shows that the tax shield can even be detrimental for example if the tax rate on stock is less than the tax rate on bonds the result will be a negative impact on profits. The author further suggests that there should be no optimal debt ratio for any individual firms.
Where G-L is the leverage gain for the shareholder:
Tc is the corporate tax rate
Tps is the personal income tax for common stock
TPB is the personal income tax for bonds
BL is the market value of the levered firm’s debt
There have been questions to the mutual exclusivity of the two theories, Carmen Cotei and Joseph Farhat (2009) studied this theory, and their conclusion was that The empirical results of the factors affecting the proportion of debt financing (reduction) and factors affecting the rate of adjustment imply that the pecking order theory and the trade-off theory are not mutually exclusive. Firms may strive for a target debt ratio range and within this range, the pecking order behavior may describe incremental decisions or, over time, firms may switch between target adjustment and pecking order behavior.
這兩種理論的互斥性一直存在問題，Carmen Cotei和Joseph Farhat(2009)研究了這一理論，他們的結論是，影響債務融資比例(減少)的因素和影響調整率的因素的實證結果表明，啄序理論和權衡理論并不是相互排斥的。企業可能會爭取一個目標債務比率范圍，在這個范圍內，啄食次序行為可能描述增量決策，或者隨著時間的推移，企業可能會在目標調整和啄食次序行為之間切換。
Conclusion – reflection on theories – which is best suited? Does it differ between businesses, are they both legitimate ways of structuring capital?
In reflection it is clear that both theories offer a potential theory of dealing with capital structure, but the empirical evidence seems to suggest that the trade off theory is the more well rounded option. As it holds well in the custom economic model, outperforming the pecking order model in the key areas. There has been also some convincing proof in favour of the relationships between gearing and the conventional determining factors (except profitability), as predicted by trade-off structure. Non-debt tax shields and growth opportunities have been argued to be inversely related to debt ratio, while collateral value of assets and size are found to have positive effects upon gearing.
I do believe that to some degree the theories are simply a base to capital structure, and that each individual company must do its own assessment on the best way to structure capital in order to produce the best results.
我確實相信，在某種程度上，這些理論只是資本結構的基礎，每個公司都必須對資本結構的最佳方式進行自己的評估，以產生最好的結果。
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