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- The determinants of capital structure of Portuguese firmsPublication . Teixeira, João; Pereira, Octávio MedeirosThis paper investigates the determinants of capital structure based on a sample of 2,804 non-financial Portuguese firms, from 2000 to 2009. A standard capital structure model is estimated controlling for firm-specific and market factors commonly used in the literature. The model is further estimated for sub samples of firms based on size, growth opportunities and leverage, as well as for the time periods before and during the international financial crisis. The result show that firms’ capital structure decision seems to conform more with the pecking order theory, rather than with the tradeoff theory. This is also true for different groups of firms based on size, growth opportunities and leverage. Finally, the results suggest that firms have adjusted their leverage as the international 2008 crisis begun.
- Customer mobility in the Portuguese financial systemPublication . Teixeira, João; Silva, Francisco; Costa, Filipe J. C.This paper investigates the level of customer mobility in the Portuguese financial system based on new survey data. We find that customers deal, on average, with more than one bank, and own several financial products. The results show that 46.9 per cent of customers had never switched bank in the past and 92.4 per cent have no intention to switch in the next 24 months. We find that customer mobility is influenced by factors related with their social and economic condition and their level of financial activity. These same factors have an impact on the choice of the reasons for not switching bank in the future. Finally, we observe that these reasons have not only a financial nature but also a psychological nature, revealing the existence of important switching costs in the Portuguese financial system.
- Mobility and market power in the Portuguese financial systemPublication . Teixeira, JoãoThis paper investigates the level of price and non-price competition in the Portuguese financial system. We study the determinants of market power in banking and discuss the role of switching costs. We show that the degree of customer mobility is low and that price instruments have a higher impact on market share than non-price instruments.
- Outsourcing and vertical integration : a survey of empirical literaturePublication . Teixeira, JoãoThis paper provides a survey of the empirical literature of outsourcing and vertical integration. This literature shows that outsourcing and integration behave in waves, with periods of greater outsourcing activity and others of a greater activity of vertical integration.
- The predictive power of structural models of corporate debt pricingPublication . Teixeira, JoãoThis paper tests empirically the performance of three structural models of corporate bond pricing: those of Merton (1974), Leland (1994) and Fan and Sundaresan (2000). We show that both Merton and Leland models overestimate bond prices while Fan and Sundaresan reveals an extremely good performance. When considering the prediction of credit spreads, the three models underestimate market spreads but, again, Fan and Sundaresan has a better performance. We find a rating, maturity, asset volatility and sector effect in the prediction power, as the models underestimate less the spreads of riskier firms and of bonds with better rating quality and longer maturity. Moreover, we find that spread errors are systematically related with some bond and firm’s specific variables, as well as term structure variables. Finally, an econometric model developed for equityholders bargaining power shows that it depends on proportional liquidation costs, firm’s size and distance to default.
- The impact of product market competition on the decision to outsource with long term contractsPublication . Teixeira, JoãoThis paper analyzes how product market competition affects the firms’ choice between outsourcing with long term contracts and outsourcing to the spot market. Product market competition among buyers can lead to an increase in financial distress costs not only for firms outsourcing to the spot market but also for firms outsourcing with a long term contract. We derive the equilibrium for an oligopoly, and show that the equilibrium depends on the magnitude of these costs and on the level of efficiency of the supplier.
- Banks’ capital, regulation and the financial crisisPublication . Teixeira, João; Silva, Francisco; Fernandes, Ana V.; Alves, Ana Carolina GomesThis paper investigates whether regulatory capital requirements play an important role in determining banks’ equity capital. We estimate equity capital regressions using panel data of a sample of 560 banks for 2004-2010. Our results suggest that regulatory capital requirements are not first order determinants of banks’ capital structure. We document differences on the effect of most factors on banks’ share of equity according to the type of bank and to the region of the bank. Finally, we show that the determinants of this share are sensitive to the recent international financial crisis and to a set of regulatory country factors.
- A survey of structural models of corporate debt pricingPublication . Teixeira, JoãoThis paper surveys the theoretical and empirical literature on structural models of corporate debt pricing. It provides an understanding of the importance of structural models in predicting credit spreads, and focuses on the role of rating, maturity, asset volatility and sector effects.
- The role of cash on the outsourcing decisionPublication . Teixeira, JoãoThis paper investigates the effect of cash on a firm’s choice between vertical integration and outsourcing. We model the production decision in a Principal-Agent framework, and show that what motivates the choice of outsourcing are the firms’ cost differentials in effort and the benefit provided by the supplier’s effort alone. This latter benefit is linked with greater probabilities of reaching high production values in good states of nature. Suppliers use cash as a strategic instrument to collect the surplus from outsourcing, and their wealth constraint or limited liability ensures them more attractive compensation schemes.
- Outsourcing : a survey of theoretical modelsPublication . Teixeira, JoãoThis paper provides a survey of theoretical models of outsourcing and vertical integration. It develops an overview of the models that rely on incomplete contracting and on strategic outsourcing.