Paul Brockman Xiumin Martin Emre Unlu

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Paul Brockman Xiumin Martin Emre Unlu"

Transcription

1 Paul Brockman Xiumin Martin Emre Unlu

2 Objective and motivation Research question and hypothesis Research design Discussion of results Conclusion

3 The purpose of this paper is to examine the CEO s portfolio sensitivities on the maturity structure of debt We hypothesize and find supporting evidence that creditors limit their exposure to compensation induced managerial risk-seeking behavior by reducing the maturity structure of corporate debt

4 The use of equity-based executive compensation has dramatically increased during the past few decades Increased by a factor of 6 between 1980 and 2000 Existing empirical literature examines the two features of equity-based compensation on risk-taking behavior Delta Sensitivity of CEO s wealth to stock price Higher delta exposes risk-averse and underdiversified managers to more risk, DISCOURAGING risk taking Vega Sensitivity of CEO wealth to volatility of stock returns Higher vega provides managers a convex payoff, ENCOURAGING risk taking

5 Empirical studies on risk-taking and incentives Knopf, Nam, and Thornton, 2002 JF Examine the relation between managerial incentives and hedging activities Firms with HIGHER delta hedge MORE Firms with HIGHER vega hedge LESS Chava and Purnanadan, 2007 JFE Examine the relation between CFO s incentives and choice of floating versus fixed rate debt CFOs with HIGHER delta choose LESS RISKY structures CEOs with HIGHER vega choose RISKIER schedules

6 Tchistyi, Yermack, and Yun, 2007 Working paper Examine the relation between managerial incentives and pricing schedule of performance sensitive debt CEOs with HIGHER delta choose LESS RISKY schedules CEOs with HIGHER vega choose RISKIER schedules

7 Coles, Daniel and Naveen, 2006 JFE Examine the relation between managerial incentives and degree of risky-policy implementations Firms with HIGHER vega carry MORE debt have HIGHER R&D spending have LOWER capital expenditures tend to be LESS diversified Mixed results for delta Findings support the view that HIGH vega ENCOURAGES risk-taking

8 Rajgopal and Shevlin (2002) JAE Examine the relation between vega and riskiness of new investments Firms with HIGHER vega make RISKIER investments Cohen, Hall and Viceira (2000) and Guay (1999) JFE Examine the relation between vega and stock volatilty Firms with HIGHER vega have HIGHER volatility Overall, empirical evidence suggests that managers respond to compensation incentives and take actions that change the firm s risk profile

9 Risk-taking can aggravate the conflicts of interest between bondholder and stockholders Risk-shifting (Asset substitution) How do creditors deal with risk-taking incentives? Extend credit on a short-term basis (Primary inquiry) Short-term debt can be used to alleviate risk-shifting problem Frequent monitoring and repricing Increase cost of debt (Secondary inquiry) Rational creditors expect the consequences of risk-taking incentives and price debt accordingly

10 Maturity structure Creditors will use short-term debt to regulate excessive risk taking Proportion of short-term debt is NEGATIVELY related to delta Proportion of short-term debt is POSITIVELY related to vega Cost of debt Cost of debt is NEGATIVELY related to delta Cost of debt is POSITIVELY related to vega

11 Analyses based on balance sheet data Examines the relation between average maturity of overall debt and managerial incentives Cross-sectional Endogenize leverage Changes regression Endogenize leverage, investment and compensation Analyses based on new issues data Examines the relation between maturity of new debt and managerial incentives

12 Analyses based on credit spreads Examines the relation between Cost of debt and managerial incentives Cost of longer term borrowing and managerial incentives

13 Sample selection period Industrial firms with SIC in range CRSP-COMPUSTAT-EXECUCOMP 6,825 firm-year observations based on 1,312 unique firms

14 Cross-sectional estimation framework Maturity structure = α 0 + α 1 Delta+ α 2 Vega + Controls Dependent variable: Maturity structure Two proxies ST3 : Proportion of total debt maturing in 3 years or less ST5 : Proportion of total debt maturing in 5 years or less Expected signs α 1 < 0 α 2 > 0

15 Treatment variables: Managerial Incentives Delta LPRCSEN : Change in CEO s wealth for 1% increase in stock price (logarithmic transformation) Vega LVOLSEN : Change in CEO s wealth for 1% change stock volatility (logarithmic transformation) How are managerial incentives computed? For option portfolio we use Core and Guay s (2002) approximation method Requires annual data Very high explanatory power

16 How are managerial incentives computed? Proxy statements report CEO s portfolio in four parts: Options from new grants Options from previous grants (exercisable) Options from previous grants (unexercisable) Stock holdings Core and Guay s (2002) approximation method yields delta and vega for the option portfolio using Black-Scholes equation Exercise price and time-to-maturity are approximated for previous grants For the stock portfolio BS-Delta STOCK =1 BS-Vega STOCK 0 (Guay, 1999)

17 Control variables Signaling Credit quality (size, credit rating dummy, Z-score) Earnings (abnormal earnings) Premature liquidation risk (leverage) Agency costs Bondholder-shareholder (asset maturity, growth opportunities) Shareholder-manager (stock ownership) Cash-flow volatility (volatility) Regulation (utility dummy) Tax (term structure)

18 Dependent Variables Independent Predicted Signs ST3 ST5 Variables Coefficient estimate p-value Coefficient estimate p-value Intercept *** *** LPRCSEN *** ** LVOLSEN *** *** LSIZE *** *** LSIZE *** *** LEVERAGE *** *** ASSET_MAT *** *** OWN *** * M/B TERM REG_DUM *** ABNEARN STD_RET ** RATE_DUM *** *** ZSCORE_DUM *** *** R 2 adj N 6,825 6,825

19 Endogenizing leverage Maturity = α 0 + α 1 Delta+ α 2 Vega + α 3 Leverage + Controls Leverage = β 0 + β 1 Delta+ β 2 Vega + β 3 Maturity + Controls Estimation method 2 SLS 3 SLS (untabulated) GMM (untabulated)

20 Dependent Variables Independent Predicted Signs ST3 ST5 Variables Coefficient estimate p-value Coefficient estimate p-value Intercept *** *** LPRCSEN *** *** LVOLSEN *** *** LSIZE *** *** LSIZE *** *** LEVERAGE *** *** ASSET_MAT *** *** OWN *** ** M/B ** * TERM * REG_DUM *** ABNEARN STD_RET RATE_DUM *** *** ZSCORE_DUM *** *** R 2 adj N 6,825 6,825

21 Change-regressions ΔMaturity = α 0 + α 1 ΔDelta+ α 2 ΔVega +ΔControls Change is computed from t-1 to t (if t-1 is unavailable t-2 is used)

22 Dependent Variables Independent Predicted Signs ΔST3 ΔST5 Variables Coefficient estimate p-value Coefficient estimate p-value Intercept * ΔLPRCSEN *** ** ΔLVOLSEN ** * ΔLSIZE ΔLSIZE ΔLEVERAGE *** *** ΔASSET_MAT ΔOWN *** ** ΔM/B ** ΔTERM ** ΔABNEARN ** ΔSTD_RET ΔRATE_DUM *** *** ΔZSCORE_DUM *** *** R 2 adj N 5,513 5,513

23 Endogenizing leverage, investment and compensation Maturity = α 0 + α 1 D+ α 2 V + α 3 L +α 4 RD +α 5 CAPEX+ Controls D = β 0 + β 1 V+ β 2 L + β 3 RD + β 4 CAPEX+ β 5 Maturity+ Controls V = γ 0 + γ 1 D+ γ 2 L + γ 3 RD + γ 4 CAPEX+ γ 5 Maturity+ Controls L = δ 0 + δ 1 D+ δ 2 V+ δ 3 RD + δ 4 CAPEX+ δ 5 Maturity+ Controls RD = ε 0 + ε 1 D+ ε 2 V+ ε 3 L + ε 4 Maturity+ Controls CAPEX = ζ 0 + ζ 1 D+ ζ 2 V+ ζ 3 L + ζ 4 Maturity+ Controls Estimation method 2 SLS 3 SLS (untabulated) GMM (untabulated)

24 Estimation summary Consistent results with prior analyses Positive (negative) relation between proportion of short-term debt and vega (delta) Consistent results with recent literature on managerial incentives Coles et al. (2006) High (low) vega (delta) results in risky firm policies Higher leverage Higher RD and lower CAPEX

25 Evaluation of economic significance Delta A change from the 50 th percentile to the 95 th percentile reduces short-term debt (ST3) by 8.7% (OLS) 9.6% (2-eqn 2SLS) 10.0% (Changes) 27.7% (6-eqn 2SLS) 30.2% (6-eqn 3SLS) 35.3% (6-eqn GMM) Median value of short-term debt =32%

26 Evaluation of economic significance Vega A change from the 50 th percentile to the 95 th percentile increases short-term debt (ST3) by 4.4% (OLS) 4.4% (2-eqn 2SLS) 6.9% (Changes) 20.1% (6-eqn 2SLS) 9.9% (6-eqn 3SLS) 27.0% (6-eqn GMM) Median value of short-term debt =32%

27 Sample selection period Industrial firms with SIC in range CRSP-COMPUSTAT-EXECUCOMP New debt issues are drawn from SDC 355 public issues 642 Rule 144A issues 2,368 private issues 4,343 syndicated issues 7,388 total debt issues representing 873 unique firms Two samples Unconsolidated sample (issue-year) Consolidated sample (firm-year)

28 Estimation framework Maturity of new issue t = α 0 + α 1 Delta t-1 + α 2 Vega t-1 + Controls Dependent variable: Maturity Unconsolidated sample (issue-year) LMAT: Maturity of new issue (logarithmic transformation) Consolidated sample (firm-year) LWEIGHT_AVG_MAT: Weighted-average of maturity of all new issues during the fiscal year (logarithmic transformation) LAVG_MAT: Arithmetic average of maturity of all new issues during the fiscal year (logarithmic transformation) Expected signs α 1 > 0 α 2 < 0

29 Unconsolidated sample (Transaction level) Consolidated sample (Firm-year level) Dependent variable LMAT Dependent variable LWEIGHT_AVG_MAT Dependent variable LAVG_MAT Independent Coefficient Coefficient Coefficient p-value p-value Variables estimate estimate estimate p-value Intercept *** *** *** LPRCSEN *** *** *** LVOLSEN *** *** *** LSIZE * LSIZE * LEVERAGE ** ** ASSET_MAT *** *** *** OWN *** *** *** M/B *** *** TERM REG_DUM ** ABNEARN STD_RET *** *** *** RATE_DUM *** ** ** ZSCORE_DUM * R 2 adj N 7,388 3,122 3,122

30 Sample selection period Industrial firms with SIC in range CRSP-COMPUSTAT-EXECUCOMP Credit spreads for traded debt are from Datastream Indenture details and credit ratings are from Mergent-FISD Bonds with special features (i.e. call, convertible etc.) are excluded 268,400 bond-day observations based on 266 bond issue and 114 unique firms

31 Estimation framework System 1 SPREAD= α 0 + α 1 Delta+ α 2 Vega + α 3 Maturity + Controls Maturity = β 0 + β 1 Delta+ β 2 Vega + β 3 SPREAD+ Controls Examines creditors reluctance to lend low-delta/high-vega CEOs Expected Signs α 1 < 0 (lower the delta, higher the borrowing cost) α 2 > 0 (higher the vega, higher the borrowing cost)

32 Estimation framework System 2 SPREAD= α 0 + α 1 Delta+ α 2 Vega + α 3 Maturity + α 4 Delta*Maturity + α 5 Vega*Maturity +Controls Maturity = β 0 + β 1 Delta+ β 2 Vega + β 3 SPREAD+ Controls Examines how maturity affects creditors reluctance to lend lowdelta/high-vega CEOs Expected Signs α 3 > 0 (establishes positive maturity premium) α 4 < 0 (longer maturity exacerbates the delta effect) α 5 > 0 (longer maturity exacerbates the vega effect)

33 Estimation framework Dependent Variable: SPREAD SPREAD= Yield to maturity Interpolated Treasury yield with corresponding maturity Control variables for the spread equation Firm-specific Equity risk and return(campbell and Taksler, 2003; Kwan, 1996) Profitability, leverage, interest-coverage (Campbell and Taksler, 2003) Issue-specific Credit rating (Campbell and Taksler, 2003) Illiquidity (Chen et al., 2007) Issue size (Campbell and Taksler, 2003) Coupon rate (Elton et al., 2004) Benchmark Treasury (Longstaff and Schwartz, 1995) Economy-wide Slope of the yield curve (Fama and French, 1989; Collin-Dufresne et al.,2001) Eurodollar-Treasury spread (longstaff, 2004)

34 Average corporate bond yield spread (%) broken down by maturity Maturity AAA AA A BBB BB B CCC Short Medium Long

35 System 1 Independent Variables Dependent Variables SPREAD LMAT Estimate p-value Estimate p-value Intercept *** *** LMAT *** SPREAD *** LPRCSEN *** *** LVOLSEN *** *** CONTROLS Not reported Not reported

36 System 2 Independent Variables Dependent Variables SPREAD LMAT Estimate p-value Estimate p-value Intercept *** *** LMAT *** SPREAD *** LPRCSEN *** *** LVOLSEN *** *** LPRCSEN x LMAT *** LVOLSEN x LMAT *** CONTROLS Not reported Not reported

37 Evaluation of economic significance Benchmark case: Maturity, delta and vega are assumed to be at sample medians Sensitivity of spread to delta = -0.39% Sensitivity of spread to vega = 0.47% Comparison case: Maturity is evaluated at the 95% and delta/vega remain unchanged Sensitivity of spread to delta = -1.00% (factor of 2.56) Sensitivity of spread to vega = 1.19% (factor of 2.53) Interpretation Long-term debt exacerbates the agency costs of delta and vega related incentives

38 Alternative evaluation of economic significance Benchmark case: Maturity, delta and vega are assumed to be at sample medians Sensitivity of spread to maturity= 1.43% Comparison case 1: Delta is evaluated at the 5% and maturity/vega remain unchanged Sensitivity of spread to maturity= 2.82% (factor of 1.97) Comparison case 2: Vega is evaluated at the 95% and maturity/delta remain unchanged Sensitivity of spread to maturity= 3.09% (factor of 2.16) Interpretation Maturity premium is high when delta is low and vega is high

39 Creditors are aware of risk-taking incentives of executive compensation When managers are encouraged to take risk Creditors use short-term debt to protect themselves. Creditors also increase cost of borrowing (especially long-term borrowing) Managerial incentives influence maturity structure and cost of debt.

EXECUTIVE COMPENSATION PORTFOLIO SENSITIVITIES AND THE COST OF EQUITY CAPITAL. Abstract

EXECUTIVE COMPENSATION PORTFOLIO SENSITIVITIES AND THE COST OF EQUITY CAPITAL. Abstract EXECUTIVE COMPENSATION PORTFOLIO SENSITIVITIES AND THE COST OF EQUITY CAPITAL Abstract Executive compensation portfolio sensitivities to change in stock price (deltas) and stock return volatility (vegas)

More information

Agency Problems, Information Asymmetries, and Convertible Debt Security Design*

Agency Problems, Information Asymmetries, and Convertible Debt Security Design* JOURNAL OF FINANCIAL INTERMEDIATION 7, 32 59 (1998) ARTICLE NO. JF980231 Agency Problems, Information Asymmetries, and Convertible Debt Security Design* Craig M. Lewis Owen Graduate School of Management,

More information

Understanding Fixed Income

Understanding Fixed Income Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding

More information

Stock Option Compensation Incentives and R&D Investment Returns

Stock Option Compensation Incentives and R&D Investment Returns Stock Option Compensation Incentives and R&D Investment Returns Bruce K. Billings Florida State University James R. Moon, Jr. Georgia State University Richard M. Morton Florida State University Dana M.

More information

Managerial Stock Options and the Hedging Premium

Managerial Stock Options and the Hedging Premium Managerial Stock Options and the Hedging Premium Niclas Hagelin a, Martin Holmen b, *, John D. Knopf c, and Bengt Pramborg d a The Swedish National Debt Office, SE-103 74 Stockholm, Sweden b Department

More information

Do stock options overcome managerial risk aversion? Evidence from option exercises

Do stock options overcome managerial risk aversion? Evidence from option exercises Do stock options overcome managerial risk aversion? Evidence from option exercises Randall A. Heron Kelley School of Business Indiana University Indianapolis, IN 46202 Tel: 317-274-4984 Email: rheron@iupui.edu

More information

Managerial incentives to increase firm volatility provided by debt, stock, and options. Joshua D. Anderson jdanders@mit.

Managerial incentives to increase firm volatility provided by debt, stock, and options. Joshua D. Anderson jdanders@mit. Managerial incentives to increase firm volatility provided by debt, stock, and options Joshua D. Anderson jdanders@mit.edu (617) 253-7974 John E. Core* jcore@mit.edu (617) 715-4819 Abstract We use option

More information

Does Executive Portfolio Structure Affect Risk Management? CEO Risktaking Incentives and Corporate Derivatives Usage

Does Executive Portfolio Structure Affect Risk Management? CEO Risktaking Incentives and Corporate Derivatives Usage Does Executive Portfolio Structure Affect Risk Management? CEO Risktaking Incentives and Corporate Derivatives Usage Daniel A. Rogers a a School of Business Administration, Portland State University, Portland,

More information

Compensation and Incentives in German Corporations

Compensation and Incentives in German Corporations University of Konstanz Department of Economics Compensation and Incentives in German Corporations Moritz Heimes and Steffen Seemann Working Paper Series 2011-20 http://www.wiwi.uni-konstanz.de/workingpaperseries

More information

Managerial Ownership of Debt and Accounting Conservatism *

Managerial Ownership of Debt and Accounting Conservatism * Managerial Ownership of Debt and Accounting Conservatism * Cong Wang Chinese University of Hong Kong Fei Xie George Mason University Xiangang Xin Chinese University of Hong Kong February 1, 2011 * We thank

More information

The Determinants and the Value of Cash Holdings: Evidence. from French firms

The Determinants and the Value of Cash Holdings: Evidence. from French firms The Determinants and the Value of Cash Holdings: Evidence from French firms Khaoula SADDOUR Cahier de recherche n 2006-6 Abstract: This paper investigates the determinants of the cash holdings of French

More information

Bonds and Yield to Maturity

Bonds and Yield to Maturity Bonds and Yield to Maturity Bonds A bond is a debt instrument requiring the issuer to repay to the lender/investor the amount borrowed (par or face value) plus interest over a specified period of time.

More information

Empirical Evidence on the Relation Between Stock Option Compensation and Risk Taking

Empirical Evidence on the Relation Between Stock Option Compensation and Risk Taking Empirical Evidence on the Relation Between Stock Option Compensation and Risk Taking Shivaram Rajgopal Assistant Professor Department of Accounting University of Washington Box 353200 Seattle, WA 98195

More information

Executive Compensation and Risk Taking in the Property and Liability Insurance Industry

Executive Compensation and Risk Taking in the Property and Liability Insurance Industry Executive Compensation and Risk Taking in the Property and Liability Insurance Industry Yu Luen Ma 1 and Ping Wang 2 Abstract: Agency theory suggests that granting stock based compensation to executives

More information

MEDDELANDEN FRÅN SVENSKA HANDELSHÖGSKOLAN SWEDISH SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION WORKING PAPERS. Daniel Pasternack & Matts Rosenberg

MEDDELANDEN FRÅN SVENSKA HANDELSHÖGSKOLAN SWEDISH SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION WORKING PAPERS. Daniel Pasternack & Matts Rosenberg MEDDELANDEN FRÅN SVENSKA HANDELSHÖGSKOLAN SWEDISH SCHOOL OF ECONOMICS AND BUSINESS ADMINISTRATION WORKING PAPERS 476 Daniel Pasternack & Matts Rosenberg THE IMPACT OF STOCK OPTION INCENTIVES ON INVESTMENT

More information

How credit analysts view and use the financial statements

How credit analysts view and use the financial statements How credit analysts view and use the financial statements Introduction Traditionally it is viewed that equity investment is high risk and bond investment low risk. Bondholders look at companies for creditworthiness,

More information

Saving and Investing. Chapter 11 Section Main Menu

Saving and Investing. Chapter 11 Section Main Menu Saving and Investing How does investing contribute to the free enterprise system? How does the financial system bring together savers and borrowers? How do financial intermediaries link savers and borrowers?

More information

Macroeconomic uncertainty and credit default swap spreads

Macroeconomic uncertainty and credit default swap spreads Macroeconomic uncertainty and credit default swap spreads Christopher F Baum Boston College and DIW Berlin Chi Wan Carleton University March 3, 2010 Abstract This paper empirically investigates the impact

More information

Managerial Ownership of Debt and Bank Loan Contracting *

Managerial Ownership of Debt and Bank Loan Contracting * Managerial Ownership of Debt and Bank Loan Contracting * Cong Wang Chinese University of Hong Kong Fei Xie George Mason University Xiangang Xin Chinese University of Hong Kong First draft: September 21,

More information

The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps *

The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps * The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps * Sergey Chernenko Ph.D. Student Harvard University Michael Faulkender Assistant Professor of Finance R.H. Smith School

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. ECON 4110: Sample Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Economists define risk as A) the difference between the return on common

More information

Finding the Right Financing Mix: The Capital Structure Decision

Finding the Right Financing Mix: The Capital Structure Decision Finding the Right Financing Mix: The Capital Structure Decision Aswath Damodaran Stern School of Business Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum

More information

- Short term notes (bonds) Maturities of 1-4 years - Medium-term notes/bonds Maturities of 5-10 years - Long-term bonds Maturities of 10-30 years

- Short term notes (bonds) Maturities of 1-4 years - Medium-term notes/bonds Maturities of 5-10 years - Long-term bonds Maturities of 10-30 years Contents 1. What Is A Bond? 2. Who Issues Bonds? Government Bonds Corporate Bonds 3. Basic Terms of Bonds Maturity Types of Coupon (Fixed, Floating, Zero Coupon) Redemption Seniority Price Yield The Relation

More information

Federal Reserve Bank of New York Staff Reports

Federal Reserve Bank of New York Staff Reports Federal Reserve Bank of New York Staff Reports The Effect of Employee Stock Options on Bank Investment Choice, Borrowing, and Capital Hamid Mehran Joshua Rosenberg Staff Report no. 305 October 2007 Revised

More information

Euro Corporate Bonds Risk Factors

Euro Corporate Bonds Risk Factors Euro Corporate Bonds Risk Factors Carolina Castagnetti Università di Pavia Eduardo Rossi Università di Pavia This version: October 2, 2006 Abstract This paper investigates the determinants of credit spread

More information

Bonds and preferred stock. Basic definitions. Preferred(?) stock. Investing in fixed income securities

Bonds and preferred stock. Basic definitions. Preferred(?) stock. Investing in fixed income securities Bonds and preferred stock Investing in fixed income securities Basic definitions Stock: share of ownership Stockholders are the owners of the firm Two types of stock: preferred and common Preferred stock:

More information

Chapter 3 Fixed Income Securities

Chapter 3 Fixed Income Securities Chapter 3 Fixed Income Securities Road Map Part A Introduction to finance. Part B Valuation of assets, given discount rates. Fixed-income securities. Stocks. Real assets (capital budgeting). Part C Determination

More information

The Effect of CEO Stock Options on Bank Investment Choice, Borrowing, and Capital

The Effect of CEO Stock Options on Bank Investment Choice, Borrowing, and Capital The Effect of CEO Stock Options on Bank Investment Choice, Borrowing, and Capital Hamid Mehran (Hamid.Mehran@ny.frb.org) * Joshua Rosenberg (Joshua.Rosenberg@ny.frb.org) * First Draft: March 10, 2007 This

More information

The Long-Run Performance of Firms Adopting Compensation Plans Based on Economic Profits

The Long-Run Performance of Firms Adopting Compensation Plans Based on Economic Profits The Long-Run Performance of Firms Adopting Compensation Plans Based on Economic Profits Chris Hogan Owen Graduate School of Management Vanderbilt University Nashville, Tennessee 37203 chris.hogan@owen.vanderbilt.edu

More information

Cost of Capital, Valuation and Strategic Financial Decision Making

Cost of Capital, Valuation and Strategic Financial Decision Making Cost of Capital, Valuation and Strategic Financial Decision Making By Dr. Valerio Poti, - Examiner in Professional 2 Stage Strategic Corporate Finance The financial crisis that hit financial markets in

More information

Models of Risk and Return

Models of Risk and Return Models of Risk and Return Aswath Damodaran Aswath Damodaran 1 First Principles Invest in projects that yield a return greater than the minimum acceptable hurdle rate. The hurdle rate should be higher for

More information

Organizational Structure and Insurers Risk Taking: Evidence from the Life Insurance Industry in Japan

Organizational Structure and Insurers Risk Taking: Evidence from the Life Insurance Industry in Japan Organizational Structure and Insurers Risk Taking: Evidence from the Life Insurance Industry in Japan Noriyoshi Yanase, Ph.D (Tokyo Keizai University, Japan) 2013 ARIA Annual Meeting 1 1. Introduction

More information

Bond Valuation. FINANCE 350 Global Financial Management. Professor Alon Brav Fuqua School of Business Duke University. Bond Valuation: An Overview

Bond Valuation. FINANCE 350 Global Financial Management. Professor Alon Brav Fuqua School of Business Duke University. Bond Valuation: An Overview Bond Valuation FINANCE 350 Global Financial Management Professor Alon Brav Fuqua School of Business Duke University 1 Bond Valuation: An Overview Bond Markets What are they? How big? How important? Valuation

More information

Determinants of Capital Structure in Developing Countries

Determinants of Capital Structure in Developing Countries Determinants of Capital Structure in Developing Countries Tugba Bas*, Gulnur Muradoglu** and Kate Phylaktis*** 1 Second draft: October 28, 2009 Abstract This study examines the determinants of capital

More information

Managerial incentives to increase firm volatility provided by debt, stock, and options. Joshua D. Anderson

Managerial incentives to increase firm volatility provided by debt, stock, and options. Joshua D. Anderson Managerial incentives to increase firm volatility provided by debt, stock, and options Joshua D. Anderson jdanders@mit.edu (617) 253-7974 John E. Core* jcore@mit.edu (617) 715-4819 Abstract We measure

More information

Fixed Income Arbitrage

Fixed Income Arbitrage Risk & Return Fixed Income Arbitrage: Nickels in Front of a Steamroller by Jefferson Duarte Francis A. Longstaff Fan Yu Fixed Income Arbitrage Broad set of market-neutral strategies intended to exploit

More information

Interest Rates and Bond Valuation

Interest Rates and Bond Valuation Interest Rates and Bond Valuation Chapter 6 Key Concepts and Skills Know the important bond features and bond types Understand bond values and why they fluctuate Understand bond ratings and what they mean

More information

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income?

Investment insight. Fixed income the what, when, where, why and how TABLE 1: DIFFERENT TYPES OF FIXED INCOME SECURITIES. What is fixed income? Fixed income investments make up a large proportion of the investment universe and can form a significant part of a diversified portfolio but investors are often much less familiar with how fixed income

More information

Interest Rates and Bond Valuation

Interest Rates and Bond Valuation and Bond Valuation 1 Bonds Debt Instrument Bondholders are lending the corporation money for some stated period of time. Liquid Asset Corporate Bonds can be traded in the secondary market. Price at which

More information

Chapter 13, ROIC and WACC

Chapter 13, ROIC and WACC Chapter 13, ROIC and WACC Lakehead University Winter 2005 Role of the CFO The Chief Financial Officer (CFO) is involved in the following decisions: Management Decisions Financing Decisions Investment Decisions

More information

Quaderni di Dipartimento. Euro corporate bonds risk factors. Carolina Castagnetti (University of Pavia) Eduardo Rossi (University of Pavia)

Quaderni di Dipartimento. Euro corporate bonds risk factors. Carolina Castagnetti (University of Pavia) Eduardo Rossi (University of Pavia) ISSN: 2279-7807 Quaderni di Dipartimento Euro corporate bonds risk factors Carolina Castagnetti (University of Pavia) Eduardo Rossi (University of Pavia) # 59 (02-06) Dipartimento di economia politica

More information

Assessing and managing credit risk of. Explaining Credit Spread Changes: New Evidence from Option-Adjusted Bond Indexes

Assessing and managing credit risk of. Explaining Credit Spread Changes: New Evidence from Option-Adjusted Bond Indexes Explaining Credit Spread Changes: New Evidence from Option-Adjusted Bond Indexes JING-ZHI HUANG AND WEIPENG KONG JING-ZHI HUANG is an assistant professor of finance at the Smeal College of Business at

More information

B.3. Robustness: alternative betas estimation

B.3. Robustness: alternative betas estimation Appendix B. Additional empirical results and robustness tests This Appendix contains additional empirical results and robustness tests. B.1. Sharpe ratios of beta-sorted portfolios Fig. B1 plots the Sharpe

More information

Capital Structure. Corporate Finance. Prof. Ian Giddy New York University CORPORATE FINANCE DECISONS INVESTMENT FINANCING RISK MGT MGT PORTFOLIO

Capital Structure. Corporate Finance. Prof. Ian Giddy New York University CORPORATE FINANCE DECISONS INVESTMENT FINANCING RISK MGT MGT PORTFOLIO Capital Structure-1 Capital Structure Prof. Ian Giddy New York University Corporate Finance CORPORATE FINANCE DECISONS INVESTMENT FINANCING RISK MGT MGT PORTFOLIO CAPITAL M&A DEBT EQUITY MEASUREMENT TOOLS

More information

What drives firms to be more diversified?

What drives firms to be more diversified? What drives firms to be more diversified? Rong Guo Columbus State University ABSTRACT This study examines the motivations of firms that become more diversified. To get a clearer picture of what drives

More information

What Determines Early Exercise of Employee Stock Options?

What Determines Early Exercise of Employee Stock Options? What Determines Early Exercise of Employee Stock Options? Summary Report of Honours Research Project Tristan Boyd Supervised by Professor Philip Brown and Dr Alex Szimayer University of Western Australia

More information

Chapter 6. Interest Rates And Bond Valuation. Learning Goals. Learning Goals (cont.)

Chapter 6. Interest Rates And Bond Valuation. Learning Goals. Learning Goals (cont.) Chapter 6 Interest Rates And Bond Valuation Learning Goals 1. Describe interest rate fundamentals, the term structure of interest rates, and risk premiums. 2. Review the legal aspects of bond financing

More information

Corporate Governance and Risk-Taking Strategies. with D&O Liability Insurance Protection. Abstract

Corporate Governance and Risk-Taking Strategies. with D&O Liability Insurance Protection. Abstract Corporate Governance and Risk-Taking Strategies with D&O Liability Insurance Protection Abstract This study provides empirical evidences regarding firm behavior in risk-taking when the top management is

More information

The design of equity-based compensation and audit fees Abstract

The design of equity-based compensation and audit fees Abstract The design of equity-based compensation and audit fees Abstract This paper investigates how the design of CEO equity-based compensation plans is associated with audit fee pricing decisions, using a sample

More information

Cash Holdings and Bank Loan Terms

Cash Holdings and Bank Loan Terms Preliminary and incomplete. Comments encouraged. Cash Holdings and Bank Loan Terms Mark Huson and Lukas Roth * January 2013 Abstract Recent evidence suggests that high cash holdings presage financial difficulties,

More information

Incentive Features in CEO Compensation in the Banking Industry

Incentive Features in CEO Compensation in the Banking Industry Kose John and Yiming Qian Incentive Features in CEO Compensation in the Banking Industry T 1. Introduction he topic of corporate governance in general, and topmanagement compensation in particular, has

More information

Corporate Governance, Incentives, and Tax Avoidance

Corporate Governance, Incentives, and Tax Avoidance Corporate Governance, Incentives, and Tax Avoidance Christopher S. Armstrong The Wharton School University of Pennsylvania carms@wharton.upenn.edu Jennifer L. Blouin * The Wharton School University of

More information

Chapter 5. Conditional CAPM. 5.1 Conditional CAPM: Theory. 5.1.1 Risk According to the CAPM. The CAPM is not a perfect model of expected returns.

Chapter 5. Conditional CAPM. 5.1 Conditional CAPM: Theory. 5.1.1 Risk According to the CAPM. The CAPM is not a perfect model of expected returns. Chapter 5 Conditional CAPM 5.1 Conditional CAPM: Theory 5.1.1 Risk According to the CAPM The CAPM is not a perfect model of expected returns. In the 40+ years of its history, many systematic deviations

More information

PRESENT DISCOUNTED VALUE

PRESENT DISCOUNTED VALUE THE BOND MARKET Bond a fixed (nominal) income asset which has a: -face value (stated value of the bond) - coupon interest rate (stated interest rate) - maturity date (length of time for fixed income payments)

More information

t = 1 2 3 1. Calculate the implied interest rates and graph the term structure of interest rates. t = 1 2 3 X t = 100 100 100 t = 1 2 3

t = 1 2 3 1. Calculate the implied interest rates and graph the term structure of interest rates. t = 1 2 3 X t = 100 100 100 t = 1 2 3 MØA 155 PROBLEM SET: Summarizing Exercise 1. Present Value [3] You are given the following prices P t today for receiving risk free payments t periods from now. t = 1 2 3 P t = 0.95 0.9 0.85 1. Calculate

More information

I. Estimating Discount Rates

I. Estimating Discount Rates I. Estimating Discount Rates DCF Valuation Aswath Damodaran 1 Estimating Inputs: Discount Rates Critical ingredient in discounted cashflow valuation. Errors in estimating the discount rate or mismatching

More information

Risk and return in Þxed income arbitrage: Nickels in front of a steamroller?

Risk and return in Þxed income arbitrage: Nickels in front of a steamroller? Risk and return in Þxed income arbitrage Université d Evry June 2005 1 Risk and return in Þxed income arbitrage: Nickels in front of a steamroller? Jefferson Duarte University of Washington Francis Longstaff

More information

EC247 FINANCIAL INSTRUMENTS AND CAPITAL MARKETS TERM PAPER

EC247 FINANCIAL INSTRUMENTS AND CAPITAL MARKETS TERM PAPER EC247 FINANCIAL INSTRUMENTS AND CAPITAL MARKETS TERM PAPER NAME: IOANNA KOULLOUROU REG. NUMBER: 1004216 1 Term Paper Title: Explain what is meant by the term structure of interest rates. Critically evaluate

More information

Answers to Review Questions

Answers to Review Questions Answers to Review Questions 1. The real rate of interest is the rate that creates an equilibrium between the supply of savings and demand for investment funds. The nominal rate of interest is the actual

More information

NIKE Case Study Solutions

NIKE Case Study Solutions NIKE Case Study Solutions Professor Corwin This case study includes several problems related to the valuation of Nike. We will work through these problems throughout the course to demonstrate some of the

More information

D&O Insurance and SEO Performance: Does Managerial Opportunism Always Hold? Abstract

D&O Insurance and SEO Performance: Does Managerial Opportunism Always Hold? Abstract D&O Insurance and SEO Performance: Does Managerial Opportunism Always Hold? Abstract This paper examines the relationship between abnormal stock performance after seasoned equity offering (SEO) and changes

More information

Liquidity of Corporate Bonds

Liquidity of Corporate Bonds Liquidity of Corporate Bonds Jack Bao, Jun Pan and Jiang Wang MIT October 21, 2008 The Q-Group Autumn Meeting Liquidity and Corporate Bonds In comparison, low levels of trading in corporate bond market

More information

CHAPTER 9 DEBT SECURITIES. by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA

CHAPTER 9 DEBT SECURITIES. by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA CHAPTER 9 DEBT SECURITIES by Lee M. Dunham, PhD, CFA, and Vijay Singal, PhD, CFA LEARNING OUTCOMES After completing this chapter, you should be able to do the following: a Identify issuers of debt securities;

More information

Credit Derivatives. Southeastern Actuaries Conference. Fall Meeting. November 18, 2005. Credit Derivatives. What are they? How are they priced?

Credit Derivatives. Southeastern Actuaries Conference. Fall Meeting. November 18, 2005. Credit Derivatives. What are they? How are they priced? 1 Credit Derivatives Southeastern Actuaries Conference Fall Meeting November 18, 2005 Credit Derivatives What are they? How are they priced? Applications in risk management Potential uses 2 2 Credit Derivatives

More information

Edinburgh Research Explorer

Edinburgh Research Explorer Edinburgh Research Explorer CEO Inside Debt Holdings and Risk-shifting: Evidence from Bank Payout Policies Citation for published version: Srivastav, A, Armitage, S & Hagendorff, J 2014, 'CEO Inside Debt

More information

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board Condensed Interim Consolidated Financial Statements of Canada Pension Plan Investment Board December 31, 2015 Condensed Interim Consolidated Balance Sheet As at December 31, 2015 (CAD millions) As at December

More information

Click Here to Buy the Tutorial

Click Here to Buy the Tutorial FIN 534 Week 4 Quiz 3 (Str) Click Here to Buy the Tutorial http://www.tutorialoutlet.com/fin-534/fin-534-week-4-quiz-3- str/ For more course tutorials visit www.tutorialoutlet.com Which of the following

More information

Financial-Institutions Management

Financial-Institutions Management Solutions 3 Chapter 11: Credit Risk Loan Pricing and Terms 9. County Bank offers one-year loans with a stated rate of 9 percent but requires a compensating balance of 10 percent. What is the true cost

More information

Bond Fund Risk Taking and Performance

Bond Fund Risk Taking and Performance Bond Fund Risk Taking and Performance Abstract This paper investigates the risk exposures of bond mutual funds and how the risk-taking behavior of these funds affects their performance. Bond mutual funds

More information

Investor Knowledge Quiz. A helpful guide to learning more about investing.

Investor Knowledge Quiz. A helpful guide to learning more about investing. Investor Knowledge Quiz A helpful guide to learning more about investing. An overwhelming 97 percent of investors realize they need to be better informed about investing. And nearly half said they could

More information

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board

Condensed Interim Consolidated Financial Statements of. Canada Pension Plan Investment Board Condensed Interim Consolidated Financial Statements of Canada Pension Plan Investment Board September 30, 2015 Condensed Interim Consolidated Balance Sheet As at September 30, 2015 As at September 30,

More information

Directors and officers liability insurance and the cost of debt

Directors and officers liability insurance and the cost of debt Directors and officers liability insurance and the cost of debt Chen Lin Chinese University of Hong Kong chenlin@cuhk.edu.hk Micah Officer Loyola Marymount University micah.officer@lmu.edu Rui Wang City

More information

The impact of business conditions on firms debt-equity choice

The impact of business conditions on firms debt-equity choice Halil D. Kaya (USA) The impact of business conditions on firms debt-equity choice Abstract Campbell and Cochrane (1999) and Siegel (2005) have shown that the macroeconomic environment has an impact on

More information

Quarterly Asset Class Report Institutional Fixed Income

Quarterly Asset Class Report Institutional Fixed Income Quarterly Asset Class Report Institutional Presentation To: Presented By: canterburyconsulting.com September 30, 015 Role in the Canterbury Consulting recommends and communicates asset-class strategy with

More information

Are Unconstrained Bond Funds a Substitute for Core Bonds?

Are Unconstrained Bond Funds a Substitute for Core Bonds? TOPICS OF INTEREST Are Unconstrained Bond Funds a Substitute for Core Bonds? By Peter Wilamoski, Ph.D. Director of Economic Research Philip Schmitt, CIMA Senior Research Associate AUGUST 2014 The problem

More information

AN EMPIRICAL EXPLORATION OF FINANCIAL COVENANTS IN LARGE BANK LOANS 1

AN EMPIRICAL EXPLORATION OF FINANCIAL COVENANTS IN LARGE BANK LOANS 1 Banks and Bank Systems / Volume 1, Issue 2, 2006 103 AN EMPIRICAL EXPLORATION OF FINANCIAL COVENANTS IN LARGE BANK LOANS 1 John K. Paglia, Donald J. Mullineaux Abstract Financial covenants in large bank

More information

BUS303. Study guide 2. Chapter 14

BUS303. Study guide 2. Chapter 14 BUS303 Study guide 2 Chapter 14 1. An efficient capital market is one in which: A. all securities that investors want are offered. B. all transactions are closed within 2 days. C. current prices reflect

More information

Your Window on Investing

Your Window on Investing Your Window on Investing Diversification Your Best Defence If you pay attention to the financial media, investment is all about shares. But the bond market is just as important. If shares are the sword

More information

DIVIDEND PAYOUT AND EXECUTIVE COMPENSATION: THEORY AND EVIDENCE. Nalinaksha Bhattacharyya 1 University of Manitoba. Amin Mawani York University

DIVIDEND PAYOUT AND EXECUTIVE COMPENSATION: THEORY AND EVIDENCE. Nalinaksha Bhattacharyya 1 University of Manitoba. Amin Mawani York University DIVIDEND PAYOUT AND EXECUTIVE COMPENSATION: THEORY AND EVIDENCE Nalinaksha Bhattacharyya 1 University of Manitoba Amin Mawani York University Cameron Morrill University of Manitoba May 2003 ABSTRACT Bhattacharyya

More information

Financial Statement Analysis of Leverage and How It Informs About Profitability and Price-to-Book Ratios

Financial Statement Analysis of Leverage and How It Informs About Profitability and Price-to-Book Ratios Financial Statement Analysis of Leverage and How It Informs About Profitability and Price-to-Book Ratios Doron Nissim Graduate School of Business Columbia University 3022 Broadway, Uris Hall 604 New York,

More information

Principles and Trade-Offs when Making Issuance Choices in the UK

Principles and Trade-Offs when Making Issuance Choices in the UK Please cite this paper as: OECD (2011), Principles and Trade-Offs when Making Issuance Choices in the UK, OECD Working Papers on Sovereign Borrowing and Public Debt Management, No. 2, OECD Publishing.

More information

Stock option plans for non-executive employees $

Stock option plans for non-executive employees $ Journal of Financial Economics 61 (2001) 253 287 Stock option plans for non-executive employees $ John E. Core, Wayne R. Guay* The Wharton School, 2400 Steinberg-Dietrich Hall, University of Pennsylvania,

More information

Journal of Banking & Finance

Journal of Banking & Finance Journal of Banking & Finance 34 (2010) 2328 2345 Contents lists available at ScienceDirect Journal of Banking & Finance journal homepage: www.elsevier.com/locate/jbf Corporate bond credit spreads and forecast

More information

Journal of Financial Economics

Journal of Financial Economics Journal of Financial Economics ] (]]]]) ]]] ]]] Contents lists available at SciVerse ScienceDirect Journal of Financial Economics journal homepage: www.elsevier.com/locate/jfec Why are US firms using more

More information

The Empirical Approach to Interest Rate and Credit Risk in a Fixed Income Portfolio

The Empirical Approach to Interest Rate and Credit Risk in a Fixed Income Portfolio www.empirical.net Seattle Portland Eugene Tacoma Anchorage March 27, 2013 The Empirical Approach to Interest Rate and Credit Risk in a Fixed Income Portfolio By Erik Lehr In recent weeks, market news about

More information

CHAPTER 8. Problems and Questions

CHAPTER 8. Problems and Questions CHAPTER 8 Problems and Questions 1. Plastico, a manufacturer of consumer plastic products, is evaluating its capital structure. The balance sheet of the company is as follows (in millions): Assets Liabilities

More information

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK

FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK 1 FIXED INCOME INVESTORS HAVE OPTIONS TO INCREASE RETURNS, LOWER RISK By Michael McMurray, CFA Senior Consultant As all investors are aware, fixed income yields and overall returns generally have been

More information

MANAGERIAL INCENTIVES AND THE USE OF FOREIGN-EXCHANGE DERIVATIVES BY BANKS

MANAGERIAL INCENTIVES AND THE USE OF FOREIGN-EXCHANGE DERIVATIVES BY BANKS MANAGERIAL INCENTIVES AND THE USE OF FOREIGN-EXCHANGE DERIVATIVES BY BANKS LEE C. ADKINS, DAVID A. CARTER, AND W. GARY SIMPSON OKLAHOMA STATE UNIVERSITY Abstract. We examine the effect of managerial incentives

More information

Rethinking Fixed Income

Rethinking Fixed Income Rethinking Fixed Income Challenging Conventional Wisdom May 2013 Risk. Reinsurance. Human Resources. Rethinking Fixed Income: Challenging Conventional Wisdom With US Treasury interest rates at, or near,

More information

An Empirical Investigation of the Lease-Debt Relation in the Restaurant and Retail Industry

An Empirical Investigation of the Lease-Debt Relation in the Restaurant and Retail Industry University of Massachusetts - Amherst ScholarWorks@UMass Amherst International CHRIE Conference-Refereed Track 2011 ICHRIE Conference Jul 28th, 4:45 PM - 4:45 PM An Empirical Investigation of the Lease-Debt

More information

What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated?

What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? What Do Short-Term Liquidity Ratios Measure? What Is Working Capital? HOCK international - 2004 1 HOCK international - 2004 2 How Is the Current Ratio Calculated? How Is the Quick Ratio Calculated? HOCK

More information

Determinants of short-term debt financing

Determinants of short-term debt financing ABSTRACT Determinants of short-term debt financing Richard H. Fosberg William Paterson University In this study, it is shown that both theories put forward to explain the amount of shortterm debt financing

More information

Bonds, in the most generic sense, are issued with three essential components.

Bonds, in the most generic sense, are issued with three essential components. Page 1 of 5 Bond Basics Often considered to be one of the most conservative of all investments, bonds actually provide benefits to both conservative and more aggressive investors alike. The variety of

More information

A Review of Cross Sectional Regression for Financial Data You should already know this material from previous study

A Review of Cross Sectional Regression for Financial Data You should already know this material from previous study A Review of Cross Sectional Regression for Financial Data You should already know this material from previous study But I will offer a review, with a focus on issues which arise in finance 1 TYPES OF FINANCIAL

More information

Executive Compensation and Incentives

Executive Compensation and Incentives Executive Compensation and Incentives Professor David F. Larcker Center for Leadership Development & Research Stanford Graduate School of Business Executive Compensation The compensation program serves

More information

Inside Debt and Corporate Investment

Inside Debt and Corporate Investment Inside Debt and Corporate Investment Joonil Lee Kyung Hee University Kevin J. Murphy University of Southern California Peter SH. Oh University of Southern California Marshall Vance University of Southern

More information

THE EFFECT OF THE YIELD CURVE ON A BOND S CALL PREMIUM

THE EFFECT OF THE YIELD CURVE ON A BOND S CALL PREMIUM THE EFFECT OF THE YIELD CURVE ON A BOND S CALL PREMIUM Wesley M. Jones, Jr, The Citadel George Lowry, Randolph-Macon College Mark Bebensee, The Citadel ABSTRACT Much of today s corporate debt is callable,

More information

Bond Valuation. Capital Budgeting and Corporate Objectives

Bond Valuation. Capital Budgeting and Corporate Objectives Bond Valuation Capital Budgeting and Corporate Objectives Professor Ron Kaniel Simon School of Business University of Rochester 1 Bond Valuation An Overview Introduction to bonds and bond markets» What

More information

Estimating Beta. Aswath Damodaran

Estimating Beta. Aswath Damodaran Estimating Beta The standard procedure for estimating betas is to regress stock returns (R j ) against market returns (R m ) - R j = a + b R m where a is the intercept and b is the slope of the regression.

More information

E. V. Bulyatkin CAPITAL STRUCTURE

E. V. Bulyatkin CAPITAL STRUCTURE E. V. Bulyatkin Graduate Student Edinburgh University Business School CAPITAL STRUCTURE Abstract. This paper aims to analyze the current capital structure of Lufthansa in order to increase market value

More information