An Investigation Of The Determinants Of BTs Debt Levels From 1998-2002: What Does It Tell Us About The Optimal Capital Structure?

Over the period 1998-2001, British Telecom (BT) dramatically increased its debt levels, from 4.8bn in 1998 to 31bn in 2001. This was accompanied by a dramatic decrease in the firms share price. Subsequent pressure from analysts and investors induced BT to use a rights issue to substantially reduce debt in 2002 (from 31bn to 18.4bn). However, the share price has continued to fall, but not so dramatically. Hence, BT provides an ideal case study of the effects of capital structure on firm value. In this case study, we will consider such questions as:a) Why did BT take on so much debt? Why did it cause firm value to fall, when many capital structure theories suggest a positive relationship between leverage and firm value?b) Why has the reduction in debt not caused an increase in equity value?c) Was BT beyond its optimal debt/equity ratio from 1998-2001? Is it still beyond the optimum?d) Does BT have an optimal capital structure? What is it? Is it static? What are the trade-offs involved?e)Does BTs case hold lessons for other firms

Job Satisfaction Of School Superintendents In California.

PURPOSE: The purpose of this study was to determine the degree of job satisfaction of school superintendents in California. Additional purposes were to determine the differences in job satisfaction of elementary, secondary and unified school superintendents; to identify and quantify factors of the work environment which contribute to and detract from job satisfaction; and lastly, to compare variations in school superintendents job satisfaction related to age, experience as a superintendent, size of school district, location of school district, school district assessed valuation, socio-economic status of community and percent of non-white students in the school district. The need for the study centered on the fact that the topic of job satisfaction relating to California\u27s school superintendents had not been investigated

ECONOMIC ANALYSIS OF TEMIK ON CITRUS IN THE INDIAN RIVER AREA IN SOUTHEASTERN FLORIDA

Temik [R](aldicarb) is a pesticide labeled for use on several citrus crops to control rust mite, whitefly, nematode and brown citrus aphid pests. Analysis of previous research experiments indicates that this pesticide is beneficial to both orange and grapefruit production and that both cost savings and higher yields can be experienced in many types of groves. Actual grove data shows that net returns for mature grapefruit that receive Temik [R] can be $500 per acre greater than net returns for identical acreage that uses other pest control options. Also, based on grove reset data it is shown that with an application of Temik [R] the resulting increased yields for three-year-old trees more than cover the additional cost of applying the Temik [R].mature citrus, resets, revenue-cost, net return, grapefruit, Crop Production/Industries,

A hybrid profit and loss sharing model using interest free debt and equity financing : an application of game theory as a decision tool

In this paper two models are contrasted whereby a corporation is seeking to finance the purchase of a merchandise from a supplier through a profit and loss sharing contract. The first mode consist of financing the purchase totally through equity. The second model is a new hybrid model that engages the supplier in the process as a shareholder. Both models are based on the principle of profit and loss sharing which suffers from the issue of moral hazard. This is manifestedin the form of the corporation shirking (providing low effort) and/or misreporting profits. It is argued that under equity financing, where the financier is the only shareholder, the corporation can hide part of the merchandise it sold and therefore misreport profits. This is, however, not possible under hybrid financing where, in addition to the financier, the supplier is interested in the financial reporting of the corporation. We apply a game theoretical approach where, under a hybrid financing, the financier and the supplier have mutual interest in true revenue reporting and therefore constitute a coalition (one player) against the corporation. Our game incorporates the effect of sharing markets and corporations’ discounts between the game participants under each model. We show theoretically that a non-conditional good Nash equilibrium exists under hybrid financing. This case does not apply to an all equity financing where the existence of a good Nash equilibrium is conditional upon the financier and the supplier sharing ratios. This shows that under the hybrid model the corporation is always induced to provide more effort (not shirk) and truly report profits

A Theory of Entrepreneurial Overconfidence, Effort, and Firm Outcomes

We present a theory of entrepreneurial behavior that explores the relationship between overconfidence and successful firm outcomes, such as acquisition or IPO. In our model, increasing overconfidence produces two conflicting effects on the probability of a successful outcome: it not only induces an entrepreneur to increase the riskiness of a venture (which lowers the likelihood of successful exit), but also drives higher entrepreneurial effort, increasing likelihood of a successful exit. Due to this conflict, a kinked or U-shaped relationship may exist between overconfidence and positive outcomes. Furthermore, our model suggests that increased outside equity mitigates the effects of overconfidence

A bargaining model for PLS entrepreneurial financing: A game theoretic model using agent-based simulation

This article aims to use a bargaining power model to reduce moral hazard—in the form of entrepreneurial effort shirking—and derive an optimum sharing ratio of a Profit and Loss Sharing (PLS) contract that involves a Venture Capitalist and an Entrepreneur. The model reveals the following interesting findings. First, under complete information—where the Venture Capitalist has a bargaining power ‐ Venture Capitalist offers the entrepreneur a profit sharing ratio that is less than her capital contribution ratio. Second, in an incomplete information setting, the entrepreneur demands a profit sharing ratio higher than her capital contribution ratio when the sum of the marginal cost (from exercising a higher effort) and private benefits (from exercising a low effort) is greater than the marginal return (from exercising a high effort). In addition, the model is used to derive a span of negotiation about the profit sharing ratio. Finally, an agent based simulation (Netlogo) platform is considered to implement the model, which allows a faster numerical calculations of the profit share and helps decide on the validity of the funding contract

Do Emotions Benefit Investment Decisions? Anticipatory Emotion and Investment Decisions in Non-professional Investors

Increasing financial trading performance is big business. A lingering question within academia and industry concerns whether emotions improve or degrade trading performance. In this study, 30 participants distributed hypothetical wealth between a share (a risk) and the bank (paying a small, sure, gain) within four trading games. Skin Conductance Response was measured while playing the games to measure anticipatory emotion, a covert emotion signal that impacts decision-making. Anticipatory emotion was significantly associated with trading performance but the direction of the correlation was dependent upon the share’s movement. Thus, anticipatory emotion is neither wholly “good” nor “bad” for trading; instead, the relationship is context-dependent. This is one of the first studies exploring the association between anticipatory emotion and trading behaviour using trading games within an experimentally rigorous environment. Our findings elucidate the relationship between anticipatory emotion and financial decision-making and have applications for improving trading performance in novice and expert traders

Integrating Smartdust into Intelligent Transportation System

The last few years have seen the emergence of many new technologies that can potentially have major impacts on Intelligent Transportation Systems (ITS). One of these technologies is a micro-electromechanical device called smartdust. A smartdust device (or a mote) is typically composed of a processing unit, some memory, and a radio chip, which allows it to communicate wirelessly with other motes within range. These motes can also be augmented with additional sensors – such as those for detecting light, temperature and acceleration – hence enhancing their features and making their application areas virtually limitless. As the smartdust concept is still relatively new, and very little is known about its application in transport domain, conducting research in this area may prove to be very valuable. It is generally perceived that smartdust will become the low-cost, ubiquitous sensor of the future, especially once its size shrinks dramatically to merit its name. Our involvement in several transport-related EU and UK funded projects (ASTRA, 2005; ASK-IT, 2007; EMMA, 2007; Foot-LITE, 2007; MESSAGE, 2007; TRACKSS, 2007) provides us with an opportunity to carry out experiments and to develop demonstrations of smartdust applications in transport systems. We also have a chance to investigate how smartdust can be used in collaboration with other (more traditional) transport sensors for developing better Co-operative Transport Systems (CTS). This paper outlines our experience in these projects and provides an illustration on the important role that the smartdust technology can play in future ITS. We also present encouraging results obtained from our experiments in investigating the feasibility of utilising smartdust in real ITS applications