Financial Instruments with Characteristics of Equity Determinants and Consequences
Financial Instruments with Characteristics of Equity Determinants and Consequences

Author: Eduardo Flores

Publisher:

Published: 2018

Total Pages:

ISBN-13:

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The purpose of this study was to evaluate the effects of hybrid financial instruments in market-based accounting research. Thus, value relevance and timeliness models were used to determine how the accounting figures are assimilated by stock prices and returns (Ohlson, 1995; Aboody et al., 1999; Lopes & Walker, 2012). Additionally, the relationships between these bonds and the cost of capital, financial leverage, and the effective tax rate were observed, all of which are crucial to this fundraising tool (Lee & Figlewicz, 1999). The methodological approach was composed of two samples: (1) the interest group, formed by 39 companies that issued hybrid instruments in 10 different jurisdictions; and (2) the control group, comprised of 107 organizations domiciled in the same jurisdictions and having a similar equity composition to the interest group. The observations, collected quarterly from December 2005 to December 2015, totaled 3,386. The findings indicated that the hybrid financial instruments affected the stock prices and returns of the issuers in a positive and statistically significant way, much like other equity elements (e.g., book value per share and earnings per share). Concerning the determinant factors for the issuance of these bonds, it was found that the issuers had a higher cost of capital, more financial leverage, and a lower effective tax rate than the non-issuers. Therefore, it can be concluded that, while new forms of contracts for obtaining resources, such as hybrid financial instruments, are relevant for the financing of business activities, it is essential that accounting models faithfully represent the economic nature of these instruments in order to prevent biases from occurring among the users of financial statements.

The Handbook of Financial Instruments
The Handbook of Financial Instruments

Author: Frank J. Fabozzi

Publisher: John Wiley & Sons

Published: 2003-02-03

Total Pages: 863

ISBN-13: 0471445606

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An investor's guide to understanding and using financial instruments The Handbook of Financial Instruments provides comprehensive coverage of a broad range of financial instruments, including equities, bonds (asset-backed and mortgage-backed securities), derivatives (equity and fixed income), insurance investment products, mutual funds, alternative investments (hedge funds and private equity), and exchange traded funds. The Handbook of Financial Instruments explores the basic features of each instrument introduced, explains their risk characteristics, and examines the markets in which they trade. Written by experts in their respective fields, this book arms individual investors and institutional investors alike with the knowledge to choose and effectively use any financial instrument available in the market today. John Wiley & Sons, Inc. is proud to be the publisher of the esteemed Frank J. Fabozzi Series. Comprising nearly 100 titles-which include numerous bestsellers—The Frank J. Fabozzi Series is a key resource for finance professionals and academics, strategists and students, and investors. The series is overseen by its eponymous editor, whose expert instruction and presentation of new ideas have been at the forefront of financial publishing for over twenty years. His successful career has provided him with the knowledge, insight, and advice that has led to this comprehensive series. Frank J. Fabozzi, PhD, CFA, CPA, is Editor of the Journal of Portfolio Management, which is read by thousands of institutional investors, as well as editor or author of over 100 books on finance for the professional and academic markets. Currently, Dr. Fabozzi is an adjunct Professor of Finance at Yale University's School of Management and on the board of directors of the Guardian Life family of funds and the Black Rock complex of funds.