资本结构(Capital-Structure)课件

高级财务管理高级财务管理Capital StructureCapital Structure资本结构 高级财务管理高级财务管理2Capital StructureCapital StructureBrief contents:Definition of Capital StructureDriving Forces for Capital StructureReview of Capital Structure TheoriesOptimal Capital Structure DecisionsEffects of Capital Structure 高级财务管理高级财务管理Definition of Capital StructureConcept of Capital StructureFeatures of Modern Firms Capital Structure高级财务管理高级财务管理Concept of Capital StructureBroad SenseuProportion of equity capital to debt capitalNarrow SenseuProportion of equity capital to long-term debtuShort-term debt as working capital高级财务管理高级财务管理Features of Modern FirmsCapital StructureCapital structure is a evolving system affected by many factorsCapital structure integrates capital with different compo-nents,ownerships,time span and levels高级财务管理高级财务管理Capital structure is a relative independent system with quality and quantity integratedEach capital component,cost and risk should harmonizeEach capital component should maintain rational and balanced proportion高级财务管理高级财务管理Capital structure is a dynimic systemOptimal capital structure is relative,it should harmonize in motion,optimally choose in variation高级财务管理高级财务管理Driving Forces for Capital StructureModern Firms Equity Rights RelationshipsDriving by Financial LeverageRestrictions of Financial Risky InterestsOther Influencial Factors高级财务管理高级财务管理Modern Firms Equity Rights RelationshipEquity rights and their relationships are the basis of capital structure formationEquity rights are structural arrangement of relative rights based on property rights.Corporate financial management is the important instruments to safeguard specific equity relationship Capital structure is financial form of corporate equity rights relationship高级财务管理高级财务管理Driving by Financial LeverageWhen arranging capital structure,financial leverage interests are the most direct driving force of using debt.As long as expected rate of return is higher than interests of debt,return on equity(ROE)will be increased by using debt.Interests cost dan shield tax,pre-tax debt costs are lower than pre-tax equity costs.高级财务管理高级财务管理Restrictions by Financial RiskFinancial risk is the uncertainty of financing activities,including incapably paying off due principals and interests,variation of ROE will be caused by using financial leverage.Firms should consider following factors when making capital structure risky decisions:uDebt ratio and debts structureuCash flow and assets structureuGrowth of sales and profitabilityuDifficulty of equity capital financing高级财务管理高级财务管理Other Influencial FactorsDifferences of industry competition and asset structure make different requirements to capital constituteTax rate and market interest level have active leading functions to firms capital structureFirms capital structure will be limited by firms profitabilityExpectations and confidence from stakeholders will exercise a great influence on firms capital structure高级财务管理高级财务管理Review of Capital Structure TheoriesNet Income TheoryNet Operating Income TheoryTraditional TheoryMM TheoryTax Shield TheoryAgency TheoryTrade-off TheorySignal Hypothesis TheoryPecking Order Theory 高级财务管理高级财务管理Net Income TheoryRepresnetative FigureuDavid DunandBasic ViewpointsuCost of debt is lower than cost of equity,Debt can decrease firms WACCuThe higher debt,the larger corporate valueu100 percent debt can maximize corporate value 高级财务管理高级财务管理Net Operating Income TheoryRepresentative FigureuDavid DunandBasic ViewpointsuFirmss WACC is permanent,has nothing to do with capital structureWhen using financial leverage,cost of debt does not change,increase of risk makes cost of equity higher than before,WACC keeps unchanged,corporate value is also constantuCorporate value is determined by future EBIT.EBIT has nothing to do with capital structure.Firms have no optimal capital structure高级财务管理高级财务管理Traditional TheoryRepresentative FigureuDavid DunandBasic ViewpointsuWith moderate degree of debts,ascent of cost of equity can not completely offset gain from leverage,WACC will decrease,corporate value will riseuWhen exceeding specific degree,the increase of equity cost can not offset lower cost of debt,WACC will increaseuOptimal capital structure is at the point when WACC change from decrease to increase高级财务管理高级财务管理MM TheoryRepresentative FiguresuModigliani andMilleruThree famous papers were published in 1958,1963 and 1976uModigliani won Nobel Prize in economics in 1958uMiller won Nobel Prize in economics in 1990高级财务管理高级财务管理Basic Assumptions under MM without taxesuPerfect capital market：There are no transaction costuPerfect information：All participants(investors)can obtain material and timely information without no costs uFirms risk classfication：Business risk measures a firms risk,debt is riskless,both individuals and institutions can borrow at the same rate as corporationsuEBIT zero growth：Profitability of firms with same risk is identical.All cash flows are perpetuities.All firms have an“expectationally constant”EBITuNo income taxes：There are no personal or corporate income taxes高级财务管理高级财务管理MM Theory:Zero Taxes uPropostion 1：A firms value is unaffected by its financing mix,but depends on a constant rate which is based on the firms risk class uPropositon 2：The cost of equity to a levered firm is equal to the cost of equity to an levered firm in the same risk class,plus a risk premium whose size depends on both the defferential between an unlevered firms cost of debt and equity and the Debt/Equity ratiouProposition 3：Whatever circumstance,rate of return on investments regards cost of capital as lowest rate of return,unaffected by its capital structure高级财务管理高级财务管理Consider：uHow will systematical risk vary？uWhat is the relation between systematical risk and equity value of a levered firms?高级财务管理高级财务管理MM With Corporate TaxesuThe value of a levered firm is equal to the value of an unlevered firm in the same risk class plus the gain from leverageu When corporate taxes are introduced,more debts,more tax saving,and larger the corporate valueuA firms value is maximized at 100 percent debt financingTDVVUL高级财务管理高级财务管理uThe cost of equity to a leveres firm is equal to the cost of equity to an unlevered firm in the same risk class,plus a risk premium whose size depends on the differential between the cost of equity and debt to an unlevered firm,the amount of financial leverage used,and the corporate tax rate:cdSUSUSUSLtSBKKKemiumRiskKK1Pr高级财务管理高级财务管理Significance of MM TheoryuAssumptions of MM had marked disparity with reality.Just due to these assumptions picked many factors in realization,MM theory could quantitatively reveal the most fundamental problem of capital structure whose relation with corporate value.This is the essence of MM theory.uMany capital structure theories developed on the basis of MM theory.Without MM theory,various kinds of capital structure theories following may not exist.uMM theory has an important role,making great contribution to modern financial management theories development.高级财务管理高级财务管理Problems of MM TheoryuNo perfect capital market hinders arbitrageuBrokerage costs can not be neglecteduIndividual debt and corporate debt can not perfectly replace each otheruThere are financial distress and agency costsuTax saving of debt will depend on operating conditions.高级财务管理高级财务管理Tax Shield Surplus TheoryFounderuDeanglu and MasulisBasic ViewpointsuExcept debt interests,lease and investment tax reduction can also shield taxes.But if a firms net income is too low in some year,tax savings will be excessive.So the more uncertain tax shield,the less attract debt financing Appropriate Debt高级财务管理高级财务管理Agency TheoryFounderuJensen and MecklingBasic ViewpointsuDebt financing can decrease stockholders agency costsuDebt financing can increase debtholders agency costsuOptimal capital structure depends on the balance of agency cost of stockholders and debtholders高级财务管理高级财务管理Trade-off TheoryIntroduce both financial distress costs and agency costs into modelWhen tax benefits of debt equal to the sum of financial distress and agency costs,corporate value is maximized,it is the optimal strtuctureEvery firm should adapt a kind of capital structure which balance interests and costs,maximizing corporate value高级财务管理高级财务管理Valuation model including financial distress and agency costs:But it is difficult to quantify financial distress costs and agency costs,this model is difficult to be appliedCostsPVofAgencyostslDistressCedFinanciaPVofExepctTDofDebtTaxBenefitVVUL)(高级财务管理高级财务管理Cost of Capital(%)14 4Debt($)ksWACCkd(1-T)D*Relationships between capital costs and leverage with financial distress and agency costs高级财务管理高级财务管理Value of Firm($)Debt($)4321Note that value is maximized and WACC is minimized at the same capital structure.D*Relationship between value and leverage.高级财务管理高级财务管理According to trade-off modle,each firm has a optimal capital structure,but is should judge and choose as follows:uWith other conditions identical,firms with lower business risk can use more debtuFirms with more tangible assets can use more debts than those with more intangible assetsuThe higher the firms marginal tax rate,the more tax benefits from debt高级财务管理高级财务管理Signal HypothesisManagers can transmit information to capital market or stockholders by changing capital structure,reflecting managers expectation of corporate risk and future operations variationsRoss(1977)：Managers using more debt,represents their objective expectation for futureMyers and Majluf(1984)：If a firm exects its operating condition better than before,the best choice is using retained earnings,then debt,the last choice is issuing new stock.Market will interpret using retained earnings and debt financing as objective exepctation by this firm,stock price will rise.Therefore,adapting financial programme which does not dilute stockholders control rights,will maximize stockholders wealth高级财务管理高级财务管理Pecking Order TheoryFoundersuMyers and MajlufBasic ViewpoinstuDebts have dual effectsTax savingsMore debt,larger corporate valuePV of financial distress and agency costsMore debt,less corporate valueWith smaller debt ratio,the first effect is big.With larger debt ratio,the second effect is small Appropriate debtuIn perfect capital market,there is a specific financing order:Internal fundsExternal funds（New debtsNew common stocks）高级财务管理高级财务管理Optimal Capital Structure DecisionsCost of Capital Comparison MethodEPS Analysis MethodCash Flow Analysis MethodTrade-off MethodEVA Method高级财务管理高级财务管理Cost of Capital Comparison MethosuChoice Criterion:Cost of capital maximizationDecision procedureCalculate WACC of each financing planJudge the feasibility of each planChoose optimal financing plan by comparison高级财务管理高级财务管理EPS Analysis MethoduDecision CriterionChoose optimal financing plan according to EPS during financing decisionsFrom the viewpoints of economic consequence,EPS analysis is easier to be accepted than cost comparison methodBoth cost comparison method and EPS analysis method,do not consider the market effects and risk factors of financing plan,the defect is significant高级财务管理高级财务管理Cash Flow Analysis MethodIf a firm has adequate and stable cash flows exepcted,the firm can appropriately increase its debt ratioIf expected cash flows are not adequate and fluctuate,the firm should control debt financing,decreasing firms financial riskAccording to pessimistis cash budget,the firm should ensure its liquidity and control its debt scale高级财务管理高级财务管理Trade-off MethodUnder optimal capital structure,corporate value is maximized with lowest WACC Increase of debt can bring tax benefits,but financial distress and agency costs will also increase,so the firm should trade off cost and returnWhen tax saving benefits larger than the sum of financial distress and agency costs,the firm can use more debtsWhen tax saving benefits smaller than the sum of financial distress and agency costs,debt scale of the firm is excessiveWhen tax saving benefits equal to the sum of financial distress and agency costs,the firm has the optimal capital structure高级财务管理高级财务管理EVA MethodShould listed companies in our country choose equity financing or debt financing?Because of the equity capitals nonrepayment and dividends uncertainty,our listed companies always neglect opportunity costs of equity capitalEVA ration strengthens the concept of cost of capital,only after deducting both cost of debt and cost of equity,the earnings can create wealth for the firm.Firms should choose the capital structure which makes corporate value maximization based on EVA method高级财务管理高级财务管理EVA =Net Operating profit after taxes,or NOPATAfter-tax dollar cost of capital used to support operations =EBIT(1corporate tax rate)(Operating capital)(WACC)高级财务管理高级财务管理EVA-based corporate valuation formula：u is the corporate value.From the viewpoint of financing body,WACC is the weighted average cost of capital of one financing plan.uFrom the viewpoint of investors,WACC is their required rate of return,it relates to opportunity cost of capital.Meanwhile,WACC should consider business risk and financial risk of the firm.1*)1(nnntttWACCEVABVtV高级财务管理高级财务管理Effect of Capital StructureLeverage Effects of Capital StructureGovernance Effects of Capital Structure高级财务管理高级财务管理Leverage Effect of Capital StructureFinancial leverage effect of capital structure means that ROE can be affected by choice of debt ratio.Formula as follows：uROE=ROA+(ROAI)(D/E)(1T)高级财务管理高级财务管理Positive leverage effect:When ROA is larger than I,more debt can lead to the increase of ROENegative leverage effect:When ROA is smaller than I,more debt can lead to the decrease of ROEPossible negative leverage effect:WhenROA equals I,debt can not affect ROE高级财务管理高级财务管理Governance Effect of Capital StructureCapital structure is the basis of corporate governanceuCapital structure is a binding and balancing mechanisms disposition with equity main body depending and affecting each other.Choice of defferent financing contracts is just the choice of different governing mechanism.Financing decision is to determine the optimal capital structure,then forms effect binding and balancing mechanism to restrain agentsGovernance effect of equity financingGovernance effect of debt financing高级财务管理高级财务管理Governance effect of equity financinguGovernance effect of equity financing means equity structures effect on firms governance efficiencyuFeatures analysis of stockholdersuEquity structure,risky costs,governance costsuGovernance effect of equity financing can realize through the control of firm by stockholdersuStockholders control can ben divided int internal control and external controluWhen equity is dispersal,takeover is the effective method to control managersuUSA and Britains capital markets are relative developed,with dispercal equity and strong mobility,firms always adapt external control corporate governance高级财务管理高级财务管理Governance Effects of Debt FinancinguGovernance effect of debt structure is its effect on governance efficiency.uDebtholders legal rights include acquisition of mortgage property and bankruptcy rights.uWhen a firms liquidity is serious weak,the firms surplus control and demand rights will be transferred from stockholders to debtholders,debtholders will control the firm and its managers.高级财务管理高级财务管理Increasing debt financing will improve equity proporation of executive managers,encourage managers to work hard.The fixation of debt interests will reduce cash flow of the firm,weaken the choice space of managers to invest uneffectively,limit managers authority consume.The establishment of effective solvency assurance mechanism can ensure banks abilities and motivation to supervise firms behaviour.高级财务管理高级财务管理492022-7-23