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- Lindblom, Ted, 1956, et al.
(författare)
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Trade Credit and the Cost of Capital
- 2008
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Ingår i: proceedings from the the XLII EWGFM Meeting Stockholm May 2008.
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Konferensbidrag (refereegranskat)
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| 3. |
- Lindblom, Ted, 1956, et al.
(författare)
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The Role of Trade Credit and the Cost of Capital
- 2012
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Ingår i: The European Association of University Teachers of Banking and Finance Annual Meeting, Aug. 29 - 1 Sept., Valetta, Malta.
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Konferensbidrag (övrigt vetenskapligt/konstnärligt)abstract
- Abstract In this paper we show that working capital in the form of trade credit may constitute a significant share of firms’ debt capacity. Despite its character of a short-term debt, such capital seems to be a long-term element of the financial structure of the firm. This has implications for the determination of the cost of capital. We analyse the cost of different types of working capital in the context of firms’ investment appraisal arguing that cash com¬mitted to trade credit extended by suppliers should generally be omitted from free cash flow. The required rate of return should then be based on the total weighted average cost of capital, which includes the implicit (market based) interest cost of trade credit. We argue that the opportunity cost of trade credit should be expected to be higher than the average interest cost of interest-bearing debts albeit lower than the partial weighted average cost of capital based on long term (interest-bearing) debt and equity capital. Hence, in a (near) optimal capital structure, the total weighted average cost of capital would be lower than the partial weighted average cost of capital
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| 4. |
- Lindblom, Ted, 1956, et al.
(författare)
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Capital structure choices
- 2011
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Ingår i: International Journal of Banking, Accounting and Finance. - 1755-3830. ; 3:1, s. 4-30
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Tidskriftsartikel (refereegranskat)abstract
- Corporate finance theory provides a number of competing hypotheses for explaining the capital structure choice of firms. The major ones are the ‘trade-off’ theory, which hypothesises an optimal combination of debt and equity capital, and the ‘pecking-order’ theory, which suggests a ranking order between different types of capital making a firm’s capital structure an aggregated result of successive financial decisions. Previous studies find evidence both supporting and contradicting the two theories. We examine the role and importance of different firm characteristics as well as to what extent managers in Swedish firms make capital structure choices in accordance with the theories and are affected by concepts like optimal capital structure, financial hierarchy, windows of opportunity, signalling, asymmetric information and flexibility. Our conclusion is that capital structure choices are built on a balancing notion suggesting a revised trade-off theory or alternatively an extended pecking order theory also incorporating agency costs and signalling.
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| 5. |
- Lindblom, Ted, 1956, et al.
(författare)
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Capital Structure Choices in Swedish firms
- 2009
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Ingår i: the 44th Euro Working Group on Financial Modeling conference in San Jose, Costa Rica, May 4-6, 2009 and December 5-8, 2009.
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Konferensbidrag (refereegranskat)abstract
- Corporate finance theory provides a number of competing hypotheses for explaining the capital structure choice of firms. The two major ones are the ‗tradeoff‘ theory, which hypothesizes that the management of a firm seeks to achieve an optimal combination of debt and equity capital, and the ‗pecking-order‘ theory, which suggests that there is a ranking order between different types of capital making a firm‘s capital structure an aggregated result of intermittent capital structure decisions. Most empirical studies find evidence both supporting and contradicting the two theories. In this paper we present results from a comprehensive survey of capital structure choices in practice. We examine the role and importance of different firm characteristics as well as to what extent managers in Swedish firms make financial decisions in accordance with capital structure theories and are affected by concepts like optimal capital structure, financial hierarchy, windows of opportunity, signalling, asymmetric information and flexibility.
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| 6. |
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| 7. |
- Lindblom, Ted, 1956, et al.
(författare)
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Financial structure decisions in large business firms
- 2010
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Ingår i: Wolpertinger 2010 Conference, European Association of University Teachers of Banking and Finance, Sept 8-12, Bangor, Wales.
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Konferensbidrag (övrigt vetenskapligt/konstnärligt)
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| 8. |
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| 9. |
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| 10. |
- Lindblom, Ted, 1956, et al.
(författare)
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Investment Appraisal Techniques and the Adoption of Quantitative Risk Measures – Evidence from Swedish 500 Largest Firms
- 2010
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Ingår i: The Sixteenth International Working Seminar on Production Economics, proceedings, March 1-5, 2010. ; 1, s. 297-308
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Konferensbidrag (refereegranskat)abstract
- This paper examines to what extent business firms use qualitative and quantitative investment appraisal techniques. It is based on the results of a survey sent to all Swedish non-financial corporations among the 500 largest and to all remaining smaller Swedish firms on the stock exchange (response rate = 34%). We find that the diffusion of sophisticated investment appraisal techniques have continued to increase the last decade, and NPV is now the most common technique among large and listed firms. We also observe that firms adopting NPV and other discounted cash flow techniques to a higher degree consider risk and avoid the use of rules of thumbs when making investment decisions. Compared with earlier studies Swedish firms tend to apply quantitative risk assessment methods to a higher degree, but, still many rely on accounting numbers to determine hurdle rates.
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