estimating the tax advantage of corporate debt this paper presents estimates of the effective tax value of incremental interest deductions for corporations taking into account that they may not be able to utilize all their interest deductions fully because of either insufficient taxable income or the availability of nondebt tax shields after describing particular features of the tax code which may drive a wedge between statutory and effective tax rates for debt finance we present estimates using the treasury corporate tax model of effective tax rates for a variety of industry groupings our estimates suggest that the after tax cost of debt varies widely across industries the magnitude of the effective tax advantage to debt finance has important implications for corporate financial behavior one issue which has been examined extensively in the corporate finance literature is whether the value of the firm is affected by the firm s leverage ratio in a recent contribution deangelo and masulis 3 have shown that financing decisions can affect the value of the firm if the effective tax advantage to debt finance varies among firms or is reduced by the presence of nondebt tax shields such as investment tax credits and depreciation deductions the effective tax advantage to debt is also an important determinant of leverage related costs gordon and malkiel 5 have recently used the statutory tax rate to estimate expected bankruptcy costs induced by the corporate tax when the firm is assumed to balance the marginal tax advantage to debt with marginal expected bankruptcy costs if however the effective tax rate for interest deductions falls short of the statutory rate the magnitude of these costs may be overstated this paper presents detailed estimates of the marginal effective tax advantage to debt finance our estimates based on data in the treasury 1978 corporate master statistical file and on simulations done with the treasury corporate tax model quantify the impact of increasing interest deductions without changing other items on the corporation s income statement 1 we simulate the impact of a change in a firm s capital structure holding its investment and production decisions constant this is an appropriate procedure for estimating the marginal

some nonlinear tax effects on asset values and investment decisions under uncertainty abstract tax system nonlinearities are often ignored but with uncertainty may have important implications for the magnitude and direction of tax effects this paper studies a particular nonlinear tax rule the policy subsidizes asset values but may discourage some investments and encourage earlier shutdown of some projects the marginal effective tax rate varies with project risk furthermore a corporate cash flow tax can encourage investment due to interactions with the nonlinear policy the paper also presents a general statement of the stochastic equilibrium valuation method which can be used to analyze other nonlinear taxes numerical examples demonstrate computational feasibility

privatisation in developing countries a review of the evidence and the policy lessons privatisation is widely promoted as a means of improving economic performance in developing countries however the policy remains controversial and the relative roles of ownership and other structural changes such as competition and regulation in promoting economic performance remain uncertain this article reviews the main empirical evidence on the impact of privatisation on economic performance in developing economies the evidence suggests that if privatisation is to improve performance over the longer term it needs to be complemented by policies that promote competition and effective state regulation and that privatisation works best in developing countries when it is integrated into a broader process of structural reform

the effect of power distribution privatization on electricity prices in turkey has liberalization served the purpose various electricity reforms have been adopted by a number of countries within the last 2 decades turkey as one of those countries has restructured its electricity market and intensively privatized the distribution companies as one of the main targets of the liberalization efforts in the sector was announced to be reduced consumer prices it is a matter of interest to look at the related developments after privatizations hence this study attempts to explore the impact of power distribution privatization in turkey on the national end user electricity prices results of the analysis suggest that privatization of electricity distribution companies has not yielded the expected retail price declines within the first 4 years of the program whereas wholesale tariffs exhibit a reduction in the rate of 10 retail tariffs show an increase of 5 9 within the period in question besides the unstable patterns of the two tariffs imply that the market is not yet ready for the automatic pricing mechanism planned to be implemented based on a cost reflective methodology therefore results indicate that the factors behind the unsatisfactory outcomes of the program should be explored in order for the privatization efforts in the turkish electricity distribution market to serve the purpose

real options agency conflicts and optimal capital structure abstract we examine the impact of a stockholder bondholder conflict over the timing of the exercise of an investment option on firm value and corporate financial policy we find that an equity maximizing firm exercises the option too early relative to a value maximizing strategy and we show how this problem can be characterized as one of overinvestment in risky investment projects equityholders incentive to overinvest significantly decreases firm value and optimal leverage and significantly increases the credit spread of risky debt numerical solutions illustrate how the agency cost of overinvestment and its effect on corporate financial policy vary with firm and project characteristics

the brazilian experience of rural electrification in the amazon with decentralized generation the need to change the paradigm from electrification to development abstract there are at least 607 thousand households in the brazilian amazon that need to be attended with some form of regular electricity service these households are not attended by the electricity sector through its electricity distribution companies and most of them have some form of precarious decentralized electricity generation that is not registered or regulated in the institutional framework diverse initiatives were taken by brazilian government to attend these household through alternatives that relied on locally available renewable energy this paper accesses this initiatives of rural electrification in the brazilian amazon first an overview of the problems of rural electricity are discussed and its specificities in the brazilian amazon then the brazilian institutional framework that organizes the decentralized electricity generation is described with its various limitations the diverse initiatives undertaken to attend the rural communities in the amazon since the 1990s are described as well as how these initiatives are linked to the policies for rural electrification the results shows that it can be inferred that sole market mechanisms are not sufficient to guarantee economic sustainability of these projects this can be one of the reasons why traditional electricity distribution companies showed the lack of interest in promoting rural electrification with other means than grid extension the most successful projects had financed efforts to integrate the generation of electricity into local development initiatives in order to guarantee sustainability and used substantial part of funding for local mobilization and organization it needs a paradigm chance by treating these initiatives as local development initiatives and promoting alternative ways for its implementation through partnership between local new actors in the electricity sector and government and implementing policy on a local municipal level

relative performance of public and private ownership under yardstick competition electricity retail distribution abstract this paper focuses on productive efficiency in swedish retail electricity distribution during 1970 1990 using hedonic output s constructed from physical outputs and their qualities and network characteristics the main focus is on efficiency of privately owned municipal utilities municipal companies and companies with mixed ownerships three different approaches are used to examine whether ownership of the distribution companies has any systematic impact on the above issues we also examine returns to scale and technical change empirical results from the three alternative approaches show that privately owned companies are relatively more efficient we find evidence of scale economies and technical progress

the importance of incorporating reliability of supply criteria in a regulatory system of electricity distribution an empirical analysis for austria abstract grid tariffs are the main source of income for distribution system operators dsos reductions of tariffs increase the cost pressure on dsos assuming they work efficiently tariff reductions potentially lead to a decrease of the electricity system s quality if no reliability of supply criteria are incorporated in the regulatory system our statistical analysis shows that the correlation between grid tariffs and electricity supply interruptions in a regulatory regime neglecting this incorporation is significant and that furthermore decreasing tariffs harm the reliability of supply even in the short run our econometric analysis of the influence of tariffs on reliability of supply shows a significant correlation between the grid tariffs and the duration of power outages in the austrian electricity grid an annual average interruption duration per installed capacity of a specific grid increases ceteris paribus by 1 36 min if the grid tariff of this specific grid is decreased in the previous year by 1 mwh

brazilian biofuels and social exclusion established and concentrated ethanol versus emerging and dispersed biodiesel increasing interest in biofuels trade between developed and developing countries has spurred worldwide discussions on issues such as subsidies and the food for fuel crisis one issue missing in recent discourse is the pressure exerted on developing countries to adopt large scale mechanized farming practices to increase economic efficiencies such approaches often exclude small scale farmers from participating in the emerging biofuels market thus exacerbating poverty and social exclusion drawing on both qualitative and technical data we discuss such pressures using brazilian ethanol and biodiesel production pressure from international markets to become more economically efficient may contribute towards the erosion of recent schemes to encourage social benefits for small farmers in biodiesel production we conclude with trade and policy implications

return on capital of brazilian electricity distributors a comparative analysis abstract this paper analyzes the electricity distribution segment in brazil from 1998 to 2005 after the conclusion of privatization process trying to assess whether the return on capital invested was in line with the risk required in the segment it concludes that the return on equity in brazil was systematically negative until 2003 only in 2005 did the distribution segment really begin to recover showing profitability consistent with the estimated cost of equity comparisons with argentine chilean and american companies reveal that firms in the latter two countries generally managed to reward shareholders according to the opportunity cost of capital estimates are that to sustain annual growth of roughly 3 7 for the next decade the entire electricity sector will demand us 7 billion in capital expenditures a year for the next decade 67 for generation 16 for transmission and 17 for distribution in order to stimulate private capital investment it is fundamental for the regulator in the tariff revision processes to consistently assure a rate of return on capital in line with the segment s real opportunity cost and therefore maintain the health of all the three segments without the burden of subsidies

winners and losers from the privatization and regulation of utilities lessons from a general equilibrium model of argentina a computable general equilibrium cqe model is used to estimate the macroeconomic and distributional effects of the privatization and regulation of utilities in argentina begun in 1989 based on data available after the privatization that indicate different kinds of efficiency gains in electricity gas water and telecommunications both the privatization and effective regulation are estimated to yield significant macroeconomic benefits gains from the privatization accrue mainly to high income classes while gains from the effective regulation of newly privatized utilities accrue mainly to low income classes computable general equilibrium cge estimates of overall employment effects suggest that privatization was not a major contributor to the dramatic rise in unemployment in argentina between 1993 and 1995 this rise was more likely due to the tequila effect of an interest rate shock

can tax convexity be ignored in corporate financing decisions abstract the standard modeling practice in corporate finance has been to assume a linear tax schedule this paper extends the structural contingent claim model of corporate finance to incorporate a more realistic convex tax schedule it is shown that tax convexity raises the optimal default boundary and thus increases the likelihood of default and also reduces the optimal leverage ratio while the former effect seems insignificant in general the effect of tax convexity on the optimal leverage ratio can be quantitatively significant we conclude that tax convexity should not be ignored in corporate financing decisions and theoretical models should use a convex tax schedule instead of a linear one thus the short answer to the question in the title is no

on the debt capacity of growth options we relate the value of growth options in the firm s investment opportunity set to the level of debt in the firm s capital structure underinestment costs of debt increase and free cash flow benefits fall with additional growth options thus if debt capacity is defined as the amount of debt the firm optimally adds for an incremental project then the debt capacity of growth options is negative this result implies that book leverage should fall with the addition of growth options our tests using a large sample of industrial firms confirm this prediction

privatization of electricity distribution in the northeast of brazil the good the bad the ugly or the naive this paper analyzes the evolution of five electricity distribution companies in the northeast of brazil using technical and financial indicators three privatized and two public firms were analyzed between 1997 and 2008 the financial indicators are used as proxies for the capacity of the business to generate value for shareholders while the technical indicators are used as proxies for service quality provided to consumers we observed that the privatized firms had their financial indicators improved after privatization increasing the value of the firm for the shareholders however there is no evidence that privatization affected the quality of service provided to consumers

on the existence of an optimal capital structure theory and evidence one of the most contentious issues in the theory of finance during the past quarter century has been the theory of capital structure the geneses of this controversy were the seminal contributions by modigliani and miller 18 19 the general academic view by the mid 1970s although not a consensus was that the optimal capital structure involves balancing the tax advantage of debt against the present value of bankruptcy costs no sooner did this general view become prevalent in the profession than miller 16 presented a new challenge by showing that under certain conditions the tax advantage of debt financing at the firm level is exactly offset by the tax disadvantage of debt at the personal level since then there has developed a burgeoning theoretical literature attempting to reconcile miller s model with the balancing theory of optimal capital structure e g deangelo and masulis 5 kim 12 and modigliani 17 the general result of this work is that if there are significant leverage related costs such as bankruptcy costs agency costs of debt and loss of non debt tax shields and if the income from equity is untaxed then the marginal bondholder s tax rate will be less than the corporate rate and there will be a positive net tax advantage to corporate debt financing the firm s optimal capital structure will involve the trade off between the tax advantage of debt and various leverage related costs the upshot of these extensions of miller s model is the recognition that the existence of an optimal capital structure is essentially an empirical issue as to whether or not the various leverage related costs are economically significant enough to influence the costs of corporate borrowing the miller model and its theoretical extensions have inspired several timeseries studies which provide evidence on the existence of leverage related costs trczinka 28 reports that from examining differences in average yields between taxable corporate bonds and tax exempt municipal bonds one cannot reject the miller hypothesis that the marginal bondholder s tax rate is not different from the corporate tax rate however trczinka is careful to point out that this finding does not necessarily imply that there is no tax advantage of corporate debt if the personal tax rate on equity is positive indeed buser and hess 1 using a longer time series of data and more sophisticated econometric techniques estimate that the average effective personal tax rate on equity is statistically positive and is not of a trivial magnitude more importantly they document evidence that is consistent with the existence of significant leverage related costs in the economy

the privatization of eeb from cash drain to major contributor in this paper we describe the successful part privatization of empresa de energia de bogota eeb the city owned electricity company in bogota colombia we describe the reason the preparation and the actual sale process as well as the outcome following the part privatization eeb went from being a company on the edge of bankruptcy to one of the most financially secure electricity companies in south america we also place the case in relation to the standard views on direct foreign investment and their social benefit finally we aim to generalize the experience to see what other organizations in a similar position can learn

a hard nut to crack implementing supply chain sustainability in an emerging economy abstract in the last decade sustainable supply chain management has become a key topic in the sustainability literature as well as a buzzword in industry and policy circles although research has made substantial contributions there is a lack of understanding on how focal companies operating in emerging economies can lead the implementation of sustainability into their supply chains this research connects and advances the constructs of cleaner production sustainability and supply chains by exploring a classic case of a focal company operating in an emerging economy that even facing considerable challenges has been able to succeed in transforming its entire supply chain drawing from stakeholder theory and contingency theory this research offers four key contributions to the sustainability and supply chain discourses as follows 1 it proposes an innovation centered approach to sustainable supply chain management by adapting and extending the tcos uncertainty framework 2 it suggests that the way a focal company manages and is influenced by its established network of relationships shape the evolution of the supply chain sustainability trajectories 3 it argues that supply chains are dynamic entities and should then be considered and understood through the lenses of evolutionary approaches and 4 it suggests that the implementation and management of sustainable supply chains are context specific challenges and therefore theoretical managerial and policy generalizations are difficult to be achieved

regulatory reform in turkish energy industry an analysis the republic of turkey has initiated an ambitious reform program in the most important segments of her energy market which requires privatization liberalization as well as a radical restructuring of these industries however there is no consensus that the measures introduced are optimal the present article attempts first to evaluate the regulatory framework created by the laws of 2001 in terms of economic efficiency considerations and second to determine what still needs to be done to improve the current situation the paper not only provides an analysis of these reforms but also lists some policy suggestions the study concludes that despite relatively good legislative framework in practice the reforms in turkey are far from ideal as they are mainly in the form of textbook reforms and therefore a significant amount of work still lies ahead of turkey to set up a fully fledged energy market

asset sale debt restructuring and liquidation this paper considers a dynamic model in which shareholders of a firm in distress have a choice of whether the firm proceeds to debt restructuring or direct liquidation at an arbitrary time in the model we show the following results fewer asset sales lower financing debt renegotiation and running costs a lower premium to the debt holders a lower cash flow volatility and a higher initial coupon increase the shareholders incentive to choose debt restructuring to avoid full liquidation in the debt renegotiation process the shareholders arrange the coupon reduction and use equity financing to retire a part of the debt value to the debt holders the timing of debt restructuring always coincides with that of liquidation without debt renegotiation most notably the shareholders do not prefer asset sale in debt restructuring even if they face high financing costs the possibility of debt renegotiation in the future increases the initial leverage ratio in the optimal capital structure

deregulation of esi and privatization of state electric utilities in thailand abstract in thailand electric supply services have all been taken over by the state and operated under state enterprises since 1968 under a law empowering its monopoly state utilities accumulated assets and built up their manpower to expand and operate the power system to serve the whole country during the time of high growth in power demand in early the1990 s the government initiated a move to privatize state electric utilities the pace of which was firmed up after 1997 the year of the financial crash engagement of independent power producers ipps through the use of long term power purchase agreements ppas for supply of electric power into the system operated by state electric utilities was also initiated from the mid 1990s total capacity of ipps and small power producers spps that sell excess power from cogeneration on to the system rose and by the late 1990s started to create a constraint on system economic dispatch in 1999 the national energy policy council nepc approved a recommendation of international consultants to transform the electric supply industry into a structure similar to the system in the united kingdom the transformation was proposed to precede corporatization and privatization of state electric utilities the objectives of deregulation were to revoke the monopoly in esi to improve transparency in electricity pricing to reduce debts of state enterprises and to improve economic efficiency industry participants have voiced strong objection to the industry model proposed with the change of market structure in uk to the new electricity trading arrangement neta the secretariat of nepc also proposed a new structure similar to neta more acceptance from industry participants have been received for the new structure however it has been assumed that the proposed structure would bring improvement in system reliability drawing investment into power generation in a manner that would be efficient tariff has also been expected to become lower because of the competition in power generation and retail trading the authors argue that for developing countries issues of timely investment in new generation and delivery capacity stable and reasonable price of electricity reliability of power supply fuel diversity and security equitable access of supply and promotion of social equity are important maintaining a functioning esi that meet the broad objectives of providing reliable power supply to serve social and economic development needs could be prioritized over introduction of complete competition in wholesale generation and retailing the authors examine the present situation of the industry and propose a transitional model that would serve the broad objectives and introduce gradual competition in the industry the proposed design would unbundle generation from transmission and retailing it would aso eventually promote intra regional interconnection and electricity trading

benchmarking and incentive regulation of quality of service an application to the uk electricity distribution networks abstract quality of service has emerged as an important issue in post reform regulation of electricity distribution networks regulators have employed partial incentive schemes to promote cost saving investment efficiency and service quality this paper presents a quality incorporated benchmarking study of the electricity distribution utilities in the uk between 1991 92 and 1998 99 we calculate technical efficiency of the utilities using data envelopment analysis technique and productivity change over time using quality incorporated malmquist indices we find that cost efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost only models do not show high correlation with those of quality based models the results also show that improvements in service quality have made a significant contribution to the sector s total productivity change in addition we show that integrating quality of service in regulatory benchmarking is preferable to cost only approaches

service quality in the electricity industry the role of privatization and managerial behavior abstract this paper analyzes the relationship between privatization and service quality in the electricity industry and tests the hypothesis that managerial behavior is a significant intervening factor the sample includes 31 italian distributors over the period 1998 2004 their quality performance is represented by continuity of supply an aspect of quality that is both contractible and regulated results of the empirical analysis suggest that the transfer of shareholdings to private investors does not lead to quality degradation the results also suggest that managerial dominance translates into a reduction in supply quality this effect is likely to be particularly strong for public sector utilities

energy requirements of households in brazil abstract in this study we determine the total direct plus indirect energy requirements of a given set of brazilian households we use a generalized input output model in order to calculate the energy embodied in goods and services purchased by households of different income level in 11 capital cities of brazil our results show that on average the total energy intensity of household expenditure increases with income level although there is a considerable spread in energy intensities within income classes as well as disparities between regions of the country the total yearly average energy requirement per household in brazil in 1995 96 was 173 6 gj 61 of which was indirect with 32 8 gj for the lower income level 66 of which was indirect and 602 2 gj for the higher income level 62 of which was indirect of this total average energy requirement 76 was required for only three consumption categories utilities 31 mobility 28 and shelter 17 this analysis calls for the attention that has to be given not only to the direct energy consumption as motor fuels and electricity for example but also to the consumption categories that encompass an important part of the indirect energy requirement of households in capital cities in brazil

the brazilian electrical system reform abstract although the brazilian electrical system has been a public monopoly the threat of electricity shortages from a lack of investment triggered a comprehensive reform in 1993 the government began a series of laws decrees and regulations reforming the tariff policy allowing privatization of utilities foreign investments and independent power produces and creating an independent transmission grid and a new electricity regulatory agency aneel the new regulatory framework is not completely defined but the proposed model intends to transform bulk electricity supply into a competitive market similar to that adopted in england our objective is to evaluate whether the proposed reform will succeed in attracting the required private capital will allow an unregulated wholesale electricity market and will require a strict regulatory framework the reform has been quite successful in privatizing the distribution companies but is allowing monopolistic rents and has failed until now to attract private investments to expand generation capacity the risk of black outs has increased and the proposed wholesale electricity market may not be appropriate because of barriers to constructing new hydroelectric units now 90 of the system therefore a new regulatory framework and a strong regulatory agency with a well defined tariff policy should have proceeded the privatization

taxes and capital structure evidence from firms response to the tax reform act of 1986 while the theoretical relation between taxes and capital structure has been extensively analyzed the empirical evidence on this issue has thus far been inconclusive one of the main difficulties confronting previous empirical studies of the cross sectional relationship between taxes and leverage was the control of intervening variables the tax reform act of 1986 tra which drastically changed the tax regime provides a unique opportunity to assess the interaction between taxes and leverage decisions in a controlled environment the authors test the relationship between leverage and certain tax related variables for a large sample of companies in the years surrounding the enactment of tra the results support the tax based theories of capital structure the findings indicate that there exists a substitution effect between debt and nondebt tax shields and that both corporate and personal tax rates affect leverage decisions coauthors are dan givoly aharon r ofer and oded sarig article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

meat meets meta a quantitative review of the price elasticity of meat the price elasticity of meat has been estimated in numerous studies that utilize a variety of disparate modeling procedures in light of differences in the literature a meta analysis is performed to assess the sensitivity of the meat price elasticity to a number of characteristics including the type of meat specification of demand nature of data estimation method characteristics of the publication outlet and location of demand the results from estimating linear and box cox meta regressions coupled with different panel data treatments reveal that these characteristics have differing influence on the reported price elasticity

empirical analysis of the environmental and energy policies in some developing countries using widely employed macroeconomic indicators the cases of brazil china and india abstract this paper proposes an empirical analysis concerning the environmental and energy policies of some important developing countries brazil china and india today present in the international scenario with very different features than in the past the research is carried out using two of the most important macroeconomic indicators several times proposed in the field of policy analysis emission intensity ratio and energy intensity ratio moreover the emission intensity ratio is used in order to verify the empirical existence of the so called environmental kuznets curve for the three countries for what concerns this last point final results do not correspond closely to the theoretical strict formulations hypothesised in the classical environmental kuznets curve model this paper follows completing and concluding the previous one carried out by the same author for some industrialised countries after a brief but ineluctable premise considering the theoretical basic assumptions to define the question and regarding general statements the specific cases are analysed main findings show that resulting trends in these developing countries are different and furthermore they differ from those already observed in industrialised ones

tax incentives to hedge for corporations facing tax function convexity hedging lowers expected tax liabilities thereby providing an incentive to hedge we use simulation methods to investigate convexity induced by tax code provisions on average the tax function is convex although in approximately 25 percent of cases it is concave carrybacks and carryforwards increase the range of income with incentives to hedge other tax code provisions have minor impacts among firms facing convex tax functions average tax savings from a five percent reduction in the volatility of taxable income are about 5 4 percent of expected tax liabilities in extreme cases these savings exceed 40 percent if a firm faces a convex tax function then hedging that reduces the volatility of taxable income reduces the firm s expected tax liability for a firm facing some form of tax progressivity when taxable income is low its effective marginal tax rate will be low but when income is high its tax rate will be high if such a firm hedges the tax increase in circumstances where income would have been low is smaller than the tax reduction in circumstances where income would have been high thus lowering expected taxes in examining the importance of various motives to hedge researchers have employed two general methods survey and regression analysis there are potential problems with each for example some managers might view the information requested in a survey as proprietary or might hesitate to admit that they employ derivatives to speculate rather than hedge to employ regression methods researchers must generate proxies for tax status in addition to other firm characteristics to the extent that a tax variable e g whether the firm has a net operating loss carryforward proxies for factors such as financial distress as well as tax circumstances analysts face an identification problem in interpreting the results

demand for food in myanmar burma abstract aggregate quarterly time series data from 1975 to 1987 on government procurement prices and open black market prices were used in estimating an almost ideal demand system aids and double log models for consumption of foodstuffs in myanmar the results from the aids model were superior to those from the double log models the estimated income elasticity of demand for non meat foodstuffs was high even for low quality rice which has been shown to be an inferior good in other asian countries the income elasticities for the non cereals groundnut oil sesame oil pulses potato and onion are positive and less than one contrary to expectation the income elasticities for all meat items are low own price elasticities for most foodstuffs were less than one the estimated cross price elasticities indicate the complementary nature of the basic food items to rice a brief analysis of the effects of taxing myanmarese rice exports and subsidising consumers indicated that there are net costs to government unevenly distributed welfare gains to consumers and welfare losses to farmers

incentive regulation of electricity distribution networks lessons of experience from britain this paper reviews the recent experience of the uk electricity distribution sector under incentive regulation the uk has a significant and transparent history in implementing incentive regulation in the period since 1990 we demonstrate the successes of this period in reducing costs prices and energy losses while maintaining quality of service we also draw out the lessons for other countries in implementing distribution sector reform we conclude by discussing the place of incentive regulation of networks within the wider reform context the required legislative framework the need for appropriate unbundling the importance of quality of service incentives the regulatory information requirements and the role of sector rationalisation

the capital structure puzzle revisited corporate finance researchers have long been puzzled by low corporate debt ratios given debt s corporate tax advantage this article recognizes that firm value typically reflects a growing stream of earnings while current debt reflects a nongrowing stream of interest payments debt to value is therefore a distorted measure of corporate tax shielding even with very small debt related costs this may explain the observed magnitude and cross sectional variation of debt ratios since this variation may be independent of tax shielding debt ratios provide an inappropriate framework for empirically examining the trade off theory of capital structure article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

is chapter 11 costly abstract we examine a sample of 459 firms filing for chapter 11 during the period 1991 1998 and find that our sample firms experience significant improvements in their operating performance during chapter 11 our evidence is consistent with the hypothesis that chapter 11 if anything provides net benefits to bankrupt firms in the cross section firms with higher debt ratios experience greater improvements in operating performance and the complexity of the renegotiation process negatively affects the improvement we find no relationship between chapter 11 outcome and changes in risk adjusted firm value in chapter 11

the relative efficiency of public and private firms in a regulated environment the case of u s electric utilities abstract the relative efficiency of privately owned and publicly owned electric utilities is investigated using theoretical and econometric models that allow for the effects of both ownership type and regulation the estimation results indicate that the two types of firms are equally cost inefficient in the united states the average effect of inefficiency is to increase the cost of production by 2 4 percent holding output constant inefficiency increases the average quantities demanded of capital and labor and decreases the average quantity demanded of fuel