part 9

[Audio] "Welcome to the first slide of our presentation on capital structure as a bargaining tool. We will discuss different aspects of this subject including contract renewal CEO compensation shareholder alignment and expropriation pension reversions lending relationships corporate governance strategy and management. Our research on this topic has led us to some insightful studies such as Perotti and Spier's 1993 study on the role of leverage in contract renegotiation. Another interesting study by Perry and Zenner in 2000 examines the relationship between C-E-O compensation and shareholder alignment or expropriation. Moving on we also have the findings of Peters Report in 1997 which focused on corporate governance in the Netherlands and made forty recommendations. We have also looked into Peterson and Rajan's 1994 research on the benefits of lending relationships for small businesses. Additionally we have examined the impact of pension reversions on the transfer of wealth between workers and stockholders as studied by Mitchell in 1992. Along with that the Handbook of Strategy and Management by Pettigrew Thomas and Whittington provides a comprehensive overview of this topic. Our research also explores the influence of personal connections on corporate decisions as seen in Pfannschmidt's 1993 study on multiple board memberships in German companies and Hermannus Pfeiffer's 1993 book on the power of banks in companies. Lastly we have also looked at the patterns of legal change in transition economies as analyzed by Katharina Pistor in 2000 and the impact of pension asset reversion after takeovers as studied by Pontiff Shleifer and Weisbach in 1990. This concludes our brief overview of the various studies that have contributed to our understanding of capital structure as a bargaining tool. Thank you for your attention and we will continue our discussion in the following slides..

[Audio] In this presentation we will be analyzing the use of capital structure as a bargaining tool in various corporate scenarios. Capital structure is the combination of debt and equity financing that a company utilizes to fund its operations. Our focus will be on exploring the main theories and research on this subject including the contributions of Michael E Porter J P Pujo and Charu G Raheja. We will also touch upon the role of institutional investors and corporate boards in overseeing and controlling a company's capital structure. Our objective is to gain an understanding of how capital structure can be leveraged effectively as a bargaining tool to achieve desired outcomes such as improved profitability and growth..

[Audio] The world of business relies heavily on capital structure for companies to negotiate deals renew contracts and align shareholder interests. However it can also lead to conflicts such as shareholder expropriation and pension reversions. As a Higher Education professor I have extensively researched and studied this topic and will be focusing on its impact on corporate governance strategy and management. Understanding the current state of financial capitalism in America requires looking back at its historical development. Scholars Ramirez and De Long (2001) suggest that politics the Great Depression and the separation of commercial and investment banking have all played a role in shaping America's hesitant steps towards financial capitalism. Historian William Zebina Ripley (1927) also explores the relationship between Main Street and Wall Street shedding light on the influence of financial markets on the wider economy. When it comes to human capital investments and decisions on corporate governance the interests of shareholders must be taken into consideration. This is highlighted in the work of researchers Roberts and Van den Steen (2000) and Robinson Rumsey and White (1996). However the influence of politics and legal restraints cannot be ignored when discussing ownership and control of public companies. Mark J Roe (1990 1991 1994) delves into the political theory of American corporate finance while in a later publication (1998) he questions whether corporate law has evolved from antitrust to corporate governance. Additionally Richard Roll's (1986) hubris hypothesis and Roberta Romano's (1991) research on shareholder lawsuits play important roles in understanding the dynamics of corporate takeovers and conflicts within the corporation. As we can see capital structure is a complex issue intertwined with politics history and legal considerations. In the next slides we will explore the different types of capital structures and their implications for companies and their stakeholders..

[Audio] Welcome to slide number four of our presentation on capital structure as a bargaining tool contract renewal CEO compensation shareholder alignment shareholder expropriation pension reversions lending relationships corporate governance strategy and management. This slide presents some key research and publications on corporate law and governance by Roberta Romano an expert in the field. In 1996 her work 'Corporate Law and Corporate Governance' was published in the Industrial and Corporate Change journal. She also wrote 'Empowering Investors' in 1998 and 'Less is More' in 2001 both influential pieces on the role of institutional investor activism in corporate governance. Other notable research includes Sherwin Rosen's study on executive contracts and Stuart Rosenstein's work on outside directors and shareholder wealth. It's important to note that corporate governance is a complex and constantly evolving topic and it's crucial to stay up-to-date with the latest research in the field..

[Audio] This slide will discuss various sources that have contributed to our understanding of the relationship between ownership structure and stock market liquidity. The first source is a study by Sarin Atulya Karen A Shastri and Kuldeep Shastri published in 1999 titled Ownership Structure and Stock Market Liquidity. This study provides insights into the relationship between ownership structure and stock market liquidity. Another source that has contributed to our understanding is a study by Scharfstein David published in 1988 titled The Disciplinary Role of Takeovers. This study provides insights into the role of takeovers in disciplining companies. Schmidt Klaus published in 1996 provides a comprehensive analysis of the costs and benefits of privatization using an incomplete contracts approach. This study highlights the importance of considering incomplete contracts when analyzing privatization. Schnitzer Monika published in 1995 provides an analysis of the concept of breach of trust in takeovers and the optimal corporate charter. Schumpeter Joseph published in 1939 provides a classic analysis of the business cycle and the capitalist process. This analysis emphasizes the importance of understanding the relationship between ownership structure and stock market liquidity. Schumpeter Joseph Alois published in 1934 provides a classic analysis of the theory of economic development. This analysis highlights the importance of understanding the relationship between ownership structure and stock market liquidity. Schwert G William published in 2000 provides an analysis of hostility in takeovers. This study highlights the importance of considering the behavior of shareholders and acquirers in takeovers..

Shleifer, Andrei, and Lawrence H. Summers, 1988, Breach of Trust in Hostile Takeovers, in Alan J. ed Auerbach, ed.: Corporate Takeovers: Causes And Consequences (University of Chicago Press, National Bureau of Economic Research Project Report series, Chicago and London). Shleifer, Andrei, and Robert Vishny, 1997, The Takeover Wave of the 1980s, in Donald H. Chew, ed.: Studies in International Corporate Finance and Governance Systems (Oxford University Press, New York). Shleifer, Andrei, and Robert W. Vishny, 1986, Large Shareholders and Corporate Control, Journal of Political Economy 94, 461-88. Shleifer, Andrei, and Robert W. Vishny, 1988, Value Maximization and the Acquisition Process, Journal of Economic Perspectives 2, 7-20. Shleifer, Andrei, and Robert W. Vishny, 1989, Equilibrium Short Horizons Of Investors And Firms, American Economic Review 80 (2), 148-153. Shleifer, Andrei, and Robert W. Vishny, 1997, A Survey of Corporate Governance, Journal of Finance 52, 737-83. Shockley, Richard and Thakor, Anjan V., 1997, Bank Loan Commitments: Data, Theory, and Tests, Journal of Money, Credit and Banking, 29-4, 517-534. Short, Helen, 1994, Ownership, Control, Financial Structure and the Performance of Firms, Journal of Economic Surveys 8, 203-49. Short, Helen, and Kevin Keasey, 1999, Managerial Ownership and the Performance of Firms: Evidence from the U.K., Journal of Corporate Finance: Contracting, Governance andOrganization 5, 79-101. Singapore, 1998, Stock Exchange of Singapore, Listing Manual (as amended) and Best Practices Guide, Stock Exchange of Singapore: Singapore, 1999. http://www.combinet.org/governance/finalver/listof.htm Smith, Brian F., and Ben Amoako-Adu, 1995, Relative Prices of Dual Class Shares, Journal of Financial and Quantitative Analysis 30, 223-39. 158/168.

[Audio] The King Report on Corporate Governance published in 1994 by the Institute of Directors of Southern Africa stresses the importance of transparent and ethical behavior in business. To promote greater transparency shareholders should have a voice in decision-making. Incomplete contracts can lead to signaling behavior misalignment of interests and a lack of trust in the market. Agency where managers act in their own self-interest can result in mismanagement and a lack of alignment of interests. The report also emphasizes the importance of efficient capital markets in promoting economic growth and development. When capital markets are functioning efficiently firms can access capital at the lowest possible cost leading to increased investment and economic growth. The Greenbury Report published in 1995 by the Study Group on Directors' Remuneration emphasizes the need for a balance between shareholder and director interests and the importance of transparency and disclosure in remuneration practices. Transaction costs the costs associated with entering into and enforcing contracts can impact market efficiency and firm behavior. Understanding these concepts and their applications in practice can help businesses navigate challenges and opportunities and promote greater transparency accountability and alignment of interests in the corporate world..

[Audio] Capital structure plays a vital role in corporate governance. How it is utilized as a negotiation tool can affect a company's financial performance and investment appeal. Companies can use capital structure to show financial strength and attract investment from shareholders during negotiations. However using capital structure comes with risks like excessive debt which can make it challenging to service that debt and put the company at risk of default. Equity financing can also limit a company's ability to attract investment and grow. Therefore companies need to use capital structure carefully to gain shareholder support and attract additional investment..

[Audio] Discuss various factors that can be utilized as bargaining tools in business. These factors include capital structure contract renewal CEO compensation shareholder alignment shareholder expropriation pension reversals lending relationships corporate governance strategy and management and person..

[Audio] Firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions. Studies suggest that firms with a more decentralized ownership structure may be better equipped to handle these decisions. Williamson Oliver E suggested that firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions. Wolfenzon Daniel argued that firms with a more pyramidal ownership structure may be better equipped to handle contract renewals and executive compensation decisions. Womack James P Daniel T Jones and Daniel Roos suggested that firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions. Wymeersch Eddy suggested that firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions. Yermack David suggested that firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions. In conclusion firms with a more decentralized ownership structure may be better equipped to handle contract renewals and executive compensation decisions..

[Audio] Shareholder alignment is crucial for achieving long-term success of a company. Shareholders have a vested interest in the company's performance and will work with management to ensure that the company is operating efficiently and effectively. In the context of capital structure and contract renewal shareholder alignment can be used as a bargaining tool to gain favorable terms for both parties. For example a company may offer to increase its debt to equity ratio in exchange for a longer contract renewal period. This allows the company to retain its control over the business while also providing the shareholders with a greater return on investment. Additionally shareholder alignment can help to prevent shareholder expropriation which occurs when shareholders attempt to take control of the company for their own gain..

[Audio] Capital structure plays a vital role in negotiations between institutional investors and companies. Institutional investors' financial assets can be obtained from tables in O-E-C-D countries. These tables provide insights into the evolution of institutional investors' financial assets over time..

[Audio] 1. Capital Structure 2. Contract Renewal 3. C-E-O Compensation 4. Shareholder Alignment 5. Shareholder Expropriation 6. Pension Reversals 7. Lending Relationships 8. Corporate Governance 9. Strategy and Management.

[Audio] We analyzed the effectiveness of corporate takeover defenses in the United States by examining the number of companies that used various takeover defense mechanisms from Fall 1999 to Mid-1999. We found that External Control Provisions such as Blank Check Preferred Stock and Advance Notice Requirement were used by 89.1% and 61.4% of companies respectively. Poison pill was used by 56.0% of companies. Considering non-financial effects of merger was used by 7.3% of companies. We found that Internal Control Provisions such as Classified Board and Fair Price were used by 58.7% and 24.8%.

[Audio] Capital structure refers to the composition of a company's financing such as the mix of equity and debt. In a privatization governments may offer tax incentives or other benefits to attract private investment and the capital structure of the privatized company may be adjusted to accommodate the interests of the private investors. For example in a privatization of a public utility in North America private investors may require a higher equity stake in order to justify the higher risk and cost of financing their investment. In contrast in a privatization of a public utility in Europe private investors may prefer a lower equity stake and a higher proportion of debt. The capital structure of the privatized company can affect the cost of financing the risk of the investment and the bargaining power of the private investors..

[Audio] We have discussed the importance of capital structure contract renewal CEO compensation shareholder alignment shareholder expropriation pension reversals lending relationships corporate governance strategy and management and other topics. We hope that you have gained valuable insights into the role of capital structure in shaping companies’ financial performance and strategic decision-making..