Post on 16-Nov-2020
14-1
Capital Structure and Leverage
14-2
Optimal capital structure : a firm’s capital structure that maximizes its firm value (or Minimizes the WACC)
Target capital structure : the mix of debt, preferred stock and common equity with which the firm plans to raise capital
Capital Structure
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What is financial leverage? Financial risk?
Financial risk is the additional risk concentrated on common stockholders as a result of financial leverage. Financial leverage is the extent to which
fixed-income securities (debts) are used in a firm’s capital structure.
As the firm borrows more money, the firm increases its financial risk causing the firm’s bond rating to decrease, and its cost of debt to increase.
14-4
Capital Structure Theory
MM (’58) theory (Modigliani and Miller) Firm’s value unaffected by its capital structure (CS
irrelevant)
=> 자본구조는 투자 결과인 현금흐름의 배분비율(주주
vs. 채권자)에만 영향, 현금흐름 크기와 위험에 영향을 미
치지 않아 자본구조와 기업가치 무관
Assumptions: No brokerage costs No taxes No bankruptcy costs The same borrowing and lending rate Symmetric information EBIT is not affected by the use of debt.
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Capital Structure Theory (cont’d)
MM (’63) theory (corporate tax effect)
D/A
FV
VU VU
VL
Value added by debt tax shelter benefits(=TcD)
Relaxed no corporate tax assumption
Leads to an optimal capital structure with 100 percent debt because of interest payments’ tax deductibility
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Capital Structure Theory (cont’d)
Miller (’77) theory (personal tax added)
• (1-Tc)(1-Ts)>(1-TB): D => firm value (L)
• (1-Tc)(1-Ts)<(1-TB): D => firm value (L)
• (1-Tc)(1-Ts)=(1-TB) : MM(’58)
• Ts=TB : MM(’63)
※ Ts : 주식투자소득에 대한 개인소득세율, TB : 채권투자소
득에 대한 개인소득세율
DT
TTVV
B
Sc
uL
)1(
)1)(1(1
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CS Theory : potential bankruptcy ㅇ 파산(Bankruptcy): 청산을 통한 기업해산; 일반적으로 채무에 대한
이자 및 원금의 지급불능상태(insolvency) 의미
(1) 기술적 지급불능(technical insolvency) : 일시적 유동성부족
(2) 실질적 지급불능(real insolvency, economic insolvency)
ㅇ 파산비용(Bankruptcy cost): 재무적곤경(financial distress)에 빠질
가능성과 실제 접했을 경우 예상되는 비용에 의해 결정
* 부채=>재무적곤경에 빠질 가능성=>파산비용=>기업가치영향
*재무적곤경: 채권자에 대한 지급의무를 이행하지 못하는 상황
(1)직접파산비용: 파산처리과정에서 발생하는 각종수수료, 법정비용
(2)간접파산비용: 파산가능성으로 인해 지불해야 하는 비용으로
기업이미지훼손에 따른 영업손실, 신용하락에 따른 기회비용 등
14-8
CS Theory : potential bankruptcy
Firm value
VU
VL* (Max.
FV)
VL=Vu + corp. tax shield
Value reduced by bankruptcy-related costs
D/A* D/A
VL=Vu+CTS–bankruptcy-
related costs
Value added by debt tax shelter benefits
14-9
CS Theory : signaling theory
ㅇ Signaling effect : 정보 비대칭성(information asymmetry)으로 인한 기업의 정보 전달 누락 가능성 => 자본조달정책/ 배당정책을 이용, 시장에 정보 전달 [also called information effect]
- a firm with unfavorable prospects wants to finance with stock to share the losses with new investors, whereas a firm with favorable prospects with debt not to share the profits.
- Need to maintain a reserve borrowing capacity for future good investment opportunity => Firms use more equity and less debt than is suggested by optimal capital structure in normal times.
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CS Theory : Agency theory ㅇ 대리인문제(agency problem): 권한 위임자 (principal)와 대리인
(agent)간 발생하는 갈등 문제 => 대리인비용(agency costs)
(1) 주주와 경영자간(자기자본대리인문제): 특권적소비,경영자 태만
(2) 부채의 대리인문제: over (under)-investment
대리인비용
총대리인비용
(D/A)* 부채비율(D/A)
부채의 대리인비용
자기자본 대리인비용
14-11
Factors for capital structure dec.
1. Sales stability
2. Operating leverage
3. Corporate tax rate
4. Management attitudes
5. Lender/rating agency attitudes
6. Effects of financing on control
14-12
Conclusions on Capital Structure
Wide variations in the use of financial leverage both across industries and among the individual firms in the same industry
Capital structure decisions have a large judgmental content.
Treat as a range rather then as a precise point