ارزیابی سهامداران از بدهی های بلند مدت و کاهش قدرت نفوذ شرکت ها
Abstract
1- Introduction
2- Sample selection and preliminary analysis
3- Methodology
4- Results
5- Conclusion
References
Abstract
The median U.S. non-regulated firm reports a 47% decline in leverage ratio between 1980 and 2010. We investigate whether the cost-benefit tradeoff to shareholders, captured by the valuation impact of an additional dollar of debt on owners' equity, is an explanation for the observed change in leverage. Using Faulkender and Wang (2006) methodology, we find that shareholders view increasing debt to have a negative impact on their wealth, that is, shareholders perceive firms to be over-levered. Further, the net cost of issuing additional debt has increased steadily for three decades beginning in 1980 before declining marginally after 2010. This trend holds for different groups of firms classified on factors known to affect capital structure decisions. Managers respond to the changing cost to shareholders by reducing (increasing) leverage when the cost of debt increases (decreases). The time-series pattern in the marginal cost of debt persists after controlling for firm-specific characteristics. We find that macroeconomic factors, such as federal debt, play a role in explaining the marginal value of debt.
Introduction
According to the tradeoff theory of capital structure, firms determine their long-term leverage ratio by balancing the costs and benefits of debt.1 Firms that deviate from their “optimal” leverage can increase their market value by moving the debt-equity mix towards the target. Consistent with this argument Graham (2000) and Binsbergen et al. (2010) find that firms are underlevered and suggest that firms can increase value by adding debt and capturing the tax-shield benefits of interest payments. The tradeoff theory therefore posits that changes in leverage ratios reflect changing dynamics of the cost-benefit tradeoff of debt. A time-series examination of the capital structure of non-financial, and unregulated public U.S. firms between 1980 and 2014 reveals a long-term trend in firms' leverage ratios. We find a general decline in long-term debt ratios from 1980 until 2010. The median (average) firm reported a long-term leverage ratio of 25.10 (26.78) percent in 1980, and this ratio fell to 13.39 (19.04) percent in 2010, a decline of approximately 47% (29%). Additionally, the median (mean) firm's leverage ratio in the 1980s was higher than that in the 1990s and the leverage ratio was at its lowest in the 2000s.2 The end of the latest final crisis in 2010 was followed by a gradual rebound in long-term debt-to-asset ratios, but the leverage ratio in 2014 is below the levels in the first two decades of the sample period. Further, the time-series trend in leverage is present in firms grouped by size, growth opportunities, corporate governance, leverage, and any other factors known to affect capital structure. In the context of the tradeoff theory, the trend in firms' leverage ratios suggests that the costs and benefits of debt are changing over time. The pervasive decline in debt levels in the first three decades of the sample period indicates that either the benefits of debt declined over that interval, or the costs steadily increased, or both. The subsequent increase in leverage ratios beginning in 2011 suggests that this trade-off has reversed after the recent financial crisis and the net benefits of issuing debt have increased. Prior studies that have tested the tradeoff theory (e.g., Bradley et al., 1984; Shyam-Sunder and Myers, 1999) do so from the viewpoint of the firms. In cross-sectional tests, these papers regress leverage or changes in leverage on several variables that capture the costs and benefits of debt to determine factors that affect firms' capital structure choices, making assumptions about the target capital structure, bankruptcy costs, etc. However, these studies provide limited insights about the relative importance of the different factors on firm valuation and do not present explanations for the pattern in leverage ratios described above.