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Four cases of a selection problem are examined where knowledge of the distributions from which project returns are drawn is private to entrepreneurs with projects. Diagrammatic analysis is used to determine the contract form offered by funding banks which choose between debt, equity or a more general contract. Two variants of the problem are novel. One new case indicates that some projects will receive equity finance and others debt finance, the other that the choice between debt or equity depends upon the level of the deposit interest rate. The efficiency of the level and composition of investment is examined.

ABSTRACTWhile the capital structure irrelevance proposition is the point of departure in corporate finance, it is unknown if debt‐or‐equity decisions matter to farm producer organizations. To inform decisions of capital acquisition, a panel study is conducted to estimate the relationships of different types of debt (current, long‐term) and equity (allocated, unallocated) to the financial performance of 707 farm producer organizations in the United States during the 2005–2011 period. Using 3,120 observations, the panel analysis indicates net sales in period t is increased by $1.97, $9.59, and $4.01 with an addition of $1 in current debt, allocated equity, or unallocated equity in period t‐1. Furthermore, the magnitude of the positive relationship of an additional dollar of allocated (unallocated) equity to net income is estimated at $0.32 ($0.14). We thus reject the notion managers and directors of farm producer organizations should decide to use debt or equity with a coin toss.

ABSTRACTManuscript Type: EmpiricalResearch Question/Issue: We examine whether corporate governance plays a role in influencing a firm's choice of financing, i.e., equity versus debt. We hypothesize that the likelihood of equity financing increases with governance because of a reduction in agency costs between investors and managers in these firms. While the reduction in agency costs occurs for both equity and debt financing, we argue that there is a more significant effect on equity financing.Research Findings/Insights: Using a sample of over 2,000 US equity and debt issuances over the period 1998 to 2006, we find that our measures of corporate governance effectiveness have a positive impact on the likelihood of choosing equity compared to debt. This association is more pronounced in small firms where information asymmetry is higher between managers and investors.Theoretical/Academic Implications: Our findings refine and extend the pecking order hypothesis, which suggests that firms will issue equity as their last resort because of the high information asymmetry associated with equity financing. We provide some of the first evidence that the pecking order hypothesis can be mitigated by corporate governance. Specifically, we find that the likelihood of issuing equity increases as governance increases. Further, we find that where agency costs due to information asymmetry are greater, the positive impact of governance on the likelihood of equity financing is also greater. That is, in support of agency cost theory, we find that firms facing high agency costs benefit the most from investing in corporate governance mechanisms that lower the agency costs. We are not aware of any prior study, published or unpublished, that has documented this result.Practitioner/Policy Implications: From a practical perspective, our study suggests that firms wishing to access equity capital markets should pay attention to their corporate governance. Specifically, by investing in corporate governance systems, firms facing high agency costs may be able to obtain easier access to not just debt but also equity markets. From a practice standpoint, in the years prior to securing financing, firms should consider making improvements to their governance (e.g., changes to board structure and/or auditor), carefully weighing the costs of making these improvements against the benefits of securing better and cheaper access to equity markets.

Das 2012 in Kraft getretene Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen (ESUG) hat die Reorganisation von Unternehmen in der Insolvenz auf eine gänzlich neue Grundlage gestellt: Die weitgehende gesellschaftsrechtliche Neutralität der InsO wurde aufgegeben und die gesellschaftsrechtliche Organisationsstruktur einer Schuldnerin dem Haftungszugriff der Gläubiger unterworfen. In den gestaltenden Teil eines Insolvenzplanes können nun auch gesellschaftsrechtlich zulässige Maßnahmen aufgenommen werden und obstruierende Anteilseigner majorisiert werden. Am Beispiel des insolvenzrechtlichen Debt Equity Swap untersucht Patrick Schulz umfassend die sich aus der Verzahnung von Insolvenzrecht und Gesellschafts- sowie Kapitalmarktrecht ergebenden (Auslegungs-)Fragen und befürwortet ein weitgehendes »Primat des Insolvenzrechts« zur widerspruchsfreien Durchsetzung der sich aus § 199 S. 2 InsO ergebenden insolvenzrechtlichen Befriedigungshierarchie