Discussion of 'Agency and Tax Explanations of Security Issuance Decisions.' (response to Eamonn J. Walsh and James Ryan in this issue, p. 943)

Article Abstract:

An assessment of the results of the empirical analysis on the influence of agency and tax considerations shows alternative interpretations. The significance earnings variation cannot possibly be an indication of observable support for agency theory or tax explanations of capital structure since that variable could manifest fiscal distress or bankruptcy although it would not create agency problems. Further studies concerning the roles of agency and tax related considerations on the choice of financing instruments by companies are suggested.

Capital Management-Internal Funds NEC, Analysis, Management, Securities, Capital markets, Capital investments, Corporations, Corporate finance, Debt financing (Corporations), Debt financing, Agency theory

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Does the pecking order hypothesis explain the dividend payout ratios of firms in the UK?

Article Abstract:

A study investigated the predictive ability of the pecking order hypothesis of corporate financing. This theory holds that there is a negative relation between the long-term values of UK business enterprises' investment and their dividend payout ratios. Results derived from the study indicate that dividend payout ratios do indeed have negative interactions with investment and positive interactions with financial leverage. The data also show that there is no significant relationship between financial leverage and investment.

Research and Development in the Social Sciences and Humanities, Financial Management, Management Science, Dividend Policy, Dividends, Investments, Business enterprises, Corporate distributions

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Determinants of Eurobonds yields

Article Abstract:

A study on the determinants of Eurobonds yields showed that the traditional theories of finance are still necessary and sufficient basis for explaining the determination of yields on US dollar denominated bonds in the European market. However, additional research may be needed to convincingly explain the yields of unrated bonds, the impact of security and how the frequency of interest payments should be dealt with.

Evaluation, Bonds, Bonds (Securities), Capital formation, Eurobond market

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