2. THEORETICAL FRAMEWORK Two traditional capital structure theories guide most academic literature concerning financing decisions; the pecking order theory and the (static) tradeoff theory. This section will elaborate on the implications of these theories in order to clarify that the market timing theory cannot be explained by one of these theories. The existing academic literature concerning market timing will also be discussed in this section. Tradeoff theory In a perfect market without taxes, costs of financial distress, agency costs and any other imperfections, the capital structure of a firm is irrelevant in terms of costs. The tradeoff theory adds some imperfections to this perfect market, by which it does create a preference for external financing. The costs of equity and debt now differ and an optimal target ratio can be …show more content…
The focus of this theory is the strict order in which financing is favored. External financing is never preferred above internal financing. The pecking order theory states that external financing is too expensive, because outside investors possess less information than insiders and therefore involve more costs than necessary. Practically speaking this could imply that equity investors pay too little for a share, and that debt investors have interest rates set too high. Retained earnings are the preferred method of financing according to the pecking order theory. When this source is used up or no longer available and the firm is compelled to use external financing, debt is preferred over equity. Debt is preferred over equity because the agency costs involved with the issuance of debt are lower. An issue of debt signals confidence and it signals that the shares are overvalued. On the other hand, an issue of equity signals that the share is currently undervalued. This phenomenon is referred to as adverse selection (Frank & Goyal,
Directional selection and disruptive selection are two of the three types of natural selection. Although both of them result in a population adapting to biotic and abiotic environments, they differ in many ways. Directional selection occurs when one extreme phenotype is favored over the other phenotypes, whereas disruptive selection occurs when two or more phenotypes are favored over the others. Another difference is that disruptive selection favors polymorphism and directional selection causes species to evolve over time and leads to the extinction of those lacking the phenotypes causing the distribution curve to shift.
Jessica Northey Exam Number 250104 1.Compare and contrast directional selection and disruptive selection, Provide and example of each. Directional selection and disruptive selection differ because instead of the subject only going in one direction it will split off and go two different ways for example if some flowers and their colors. The main colors may be red, pink and white primarily, and the more dominate color being a pink flower. But if we remove the pink flower completely from the equation then the flowers will shift toward the dominant white color over the red.
Hill Country practices the conservative capital structure, which has excessive liquidity and lower interest rates that will bring negative impacts on the company’s financial performance measures. So, it is a good opportunity for Hill Country to implement a more aggressive capital structure. For example, the Chief Executive Officer (CEO) of this company can increase the leverage ratio by either increase the debt or reduce the equity or both. At first, debt financing usually used when a firm raises money for capital expenditures by issuing debt instruments to individual or institutional investors.
Social learning theory and social bonding theory are two theories that may be compared and contrasted because they both overlap and differ. Although these theories have their similarities and differences, one theory may prove to be more convincing in terms of applying the theory to the understanding of crime and delinquency. Social learning theory refers to Akers’ theory of crime and deviance. Akers attempted to specify the mechanism and processes through which criminal learning takes place by explaining crime and deviance; he did this in such a way that the likelihood of conforming or deviant behavior based on the influence of an individual’s history of learning was accounted for. This theory was based off Sutherland’s differential association theory, which had nine propositions outlining the process by which individuals acquire attitudes favorable to criminal or delinquent behavior with the basic idea that people tend to associate with others in which they come into contact.
I would that the most accurate mate selection theory is the complementary-needs theory. I believe that this theory is the most accurate because a marriage will last longer if the couple complements each other's personality quirks. This theory states that, “individuals select a mate whose personality and needs are opposite and complementary to their own” (Knox & Schacht, 2013, p. 164). I have noticed that with the relationships or marriages of family members and friends in my life that there is more of a balance in the relationship with each person complements one another. Even though this is true for marriages that each person should complement each other's personalities, this is also true for any type of relationships.
Introduction The main objective of this particular case study is to assist Victor Dubinski, the current CEO of Blaine Kitchenware, decide whether or not repurchasing shares and changing the firm’s capital structure in favor of more debt could actually be benefit the company and its shareholders. Blaine Kitchenware is a small cap, public company who focuses on selling various different residential kitchen appliances. Up until this point, the company has only used cash and equity financing to acquire independent kitchen appliance manufacturers, and expand into foreign markets abroad. Given their excess cash and lack of debt, Blaine Kitchenware is considered to be “over-liquid and under-leveraged” (Luehrman & Heilprin, 2009).
Traditionally, pro forma earnings are lampooned as “earnings before the bad stuff”, which are lower than the figure according the GAAP. Companies may present to the public their earnings and results of operations on the basis of methodologies other than GAAP. And this presentation in the earnings release is often referred to as “pro forma” financial information. Many companies were thought to be using pro forma figures not only to exclude one-time charges, but also to strip put recurrent costs and other elements that they claimed concealed their “true” performance. “Pro forma” financial information can serve useful purposes.
Two theories that can be compared are the Social Learning Theory and the Labeling Theory. When comparing these two theories we can use the juvenile crime of stealing to see how the theories are similar and different. The social learning theory basically states that crime like other behaviors is learned. The other theory, labeling states that certain things or children aren’t necessary deviant until society labels them as so. These two theories also have positives and negatives pertaining to how effective they are in the causes of juvenile delinquent behavior.
Grandma’s Best currently has a broad product/narrow- medium market focus. The firm offers products in all five categories within the confectionery industry (chocolates, soft candy, hard candy, holiday specific chocolates and biscuits/cookies). Grandma’s Best primarily targets the middle to higher end retail outlets and gourmet shops. Grandma’s Best has .05% market share of the United States confectionery market which consists of three considerable players. Mars, Inc. owns 30.2% of the market, Hershey Company owns 27.7% and Kraft Foods, Inc. owns 7.2% followed by other companies who own 34.9% of the market.
Since the value of equity is inversely affected by the present value of future cash flows and thus WACC, reducing the WACC (equivalent to cost of capital in an efficient market in the long run) is another way to increase the value of equity. This can be done in 3 ways: a) Reducing the cost of debt; b) Reducing the cost of equity; and c) Through capital
In this essay I will be comparing the identity theory to the behaviorist’s theory. Both theories are similar in the sense that they are of the monists (physicalism) view but they do vary in many other ways that I will point out in the duration of my essay. I do believe that the behaviorist theory is the better argument for reasons I will outline in this essay. The identity theory The identity theory refers to the understanding that the mind and the brain are identical.
The brand name of the Starbuck is popular are no longer depending on the quality of the coffee only, but also the customer service. A study shown that the turnover rate of employee at Starbuck was 65% which compare to the other national chain retailer with the average range of 150% to 400%. This indicates that Starbuck have a good work environment that allows them to retain employees and emphasized in term of the employee motivation. One of the motivation theory that Starbuck had been applied is the Maslow’s need hierarchy theory.
First of all, I need to clarify that there is no dominant method of comparison between countries. Every method has its own advantages and disadvantages involving the level of abstraction, the scope of covering, etc. (Landman & Carvalho, 2016).In the early days, Lijphart (1971) called comparing many countries when using quantitative analysis, the ‘statistical’ method and on the other hand, when comparing few countries with the use of qualitative analysis the ‘comparative’ method. But nowadays, comparative studies are conducted to compare similarities and differences across countries and within countries.
THEORETICAL BACKGROUND OF THE STUDY: 3.1 RECRUITMENT & SELECTION Recruitment and selection is one of the most important management functions. The whole process represents a significant investment in both financial and other resources. Recruitment and selection are two of the most important functions of personnel management. Recruitment procedure selection and helps in selecting a right candidate.
Cost of Capital Analysis The GraceKennedy Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for owners and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. During 2014, the Group’s Strategy, which was unchanged for 2013, was to maintain a debt to equity ratio not exceeding 100%. The debt equity ratios at 31 December 2014 is a