Iacobucci and Triantis clarify that any type of corporation with legal personhood qualifies to issue debt as long as it can own property, enter contracts and be sued.
Corporates can be issued in bearer form, where the holder of the actual certificate is required to update information periodically with the trustee or issuer, or as "registry" bonds, with the owner named but which carry no material coupons. "Book entry" bonds reside in a central securities depository and are registered with the broker, who then assigns interest to the owner's brokerage account. Corporate bonds can be unsecured "debentures," or backed by specific assets identified in the indenture. First-mortgage bonds are backed by lien against real estate owned by the debt-incurring firm; collateral trust issues are backed by other financial assets owned by the corporation, and "Equipment Trust Certificates" are tied to large real assets other than real estate. All these types of security provide collateral against bankruptcy which is paid before equity issues are reimbursed unless otherwise specified, in which case the bond is called "subordinated." If a third party or parties back the debt, the result is a "guaranteed" bond, where the bond guarantors stand liable for principal repayment in the event of bankruptcy.
Alpreda, R. (2008). Cost Of Capital Adjusted For Governance Risk Through A Multiplicative
Model Of Expected Returns. University Of Cema Center for the Study of Public and Private Governance, Working Paper Series, number 383.Academic Search Complete papers.ssrn.com/sol3/papers.cfm?abstract_id=1305220 (accessed Jan. 5, 2012).
Financial Industry Regulatory Authority. (2012). Individual Bonds.
http://apps.finra.org/investor_information/smart/bonds/306000.asp (accessed Jan. 5, 2012)
Financial Industry Regulatory Authority. (2012). Bond Maturity. Bond Basics.
http://apps.finra.org/investor_Information/smart/bonds/102000.asp (accessed Jan. 5, 2012).
Financial Industry Regulatory Authority. (2012). Floating Rate Bonds. Bond Basics.
http://apps.finra.org/investor_Information/smart/bonds/103300.asp (accessed Jan. 5, 2012).
Financial Industry Regulatory Authority. (2012). Corporate Bonds. Individual Bonds.
http://apps.finra.org/investor_information/smart/bonds/306000.asp (accessed Jan. 5, 2012).
Franc-Dabrowska, J. (2007). Does Dividend Policy Follow the Capital Structure Theory?
Managing Global Transitions 7, no. 4: 367 -- 382 (2007). Academic Search Complete www.fm-kp.si/zalozba/ISSN/1581-6311/7_367-382.pdf (accessed Jan. 5, 2012).
Iacobucci, E. And Triantis, G. (2007). Economic And Legal Boundaries Of Firms. Virginia Law Review 93 Va. L. Rev. 515-570. www.virginialawreview.org/content/pdfs/93/515.pdf...
Investopedia. (2011). Bond Basics: Different Types of Bonds. Investopedia ULC (2011).
http://www.investopedia.com/university/bonds/bonds4.asp#ixzz1iiAcERxi (accessed Jan. 5, 2012).
Kwan, S. (2009). Capital Structure in Banking, FRBSF Economic Letter 2009-37 (7 Dec.
2009). http://www.frbsf.org/publications/economics/letter/2009/el2009-37.html (accessed Jan. 5, 2012).
1. Financial Industry Regulatory Authority (FINRA), "Individual Bonds" (2012). http://apps.finra.org/investor_information/smart/bonds/306000.asp
3. Investopedia, "Bond Basics: Different Types of Bonds." Investopedia ULC (2011).
4. Financial Industry Regulatory Authority (FINRA), "Individual Bonds" (2012). http://apps.finra.org/investor_information/smart/bonds/306000.asp
5. FINRA, "Bond Maturity," DATE, http://apps.finra.org/investor_Information/smart/bonds/102000.asp
6. FINRA, "Floating Rate Bonds," DATE, http://apps.finra.org/investor_Information/smart/bonds/103300.asp
7. Iacobucci and Triantis provide an extended discussion of the legal ramifications underlying the decision between debt and equity for borrower / originator (firm) and creditor / owner. Edward Iacobucci and George Triantis, "Economic And Legal Boundaries Of Firms," Virginia Law Review 93 Va. L. Rev. 515-570.
8. FINRA, "Corporate Bonds," Individual Bonds (2012)
9. Justyna Franc-Dabrowska, "Does Dividend Policy Follow the Capital Structure Theory?," Managing Global Transitions 7, no. 4: 367 -- 382, p. 368. Rodolfo Apreda sets out the historical development of the theory of capital structure from Modigliani and Miller in 1958 to his own proposed adjustment for legal risk in a particularly clear and succinct presentation in "Cost Of Capital Adjusted For Governance Risk Through A Multiplicative Model Of Expected Returns," University Of Cema Center for the Study of Public and Private Governance, Working Paper Series, November 2008, number 383. papers.ssrn.com/sol3/papers.cfm?abstract_id=1305220. The Federal Reserve Bank of San Francisco (Simon Kwan, "Capital Structure in Banking," FRBSF Economic Letter 2009-37 (7 Dec. 2009) clarifies that evaluation methodologies continue to evolve and there may be conflicting decision thresholds under simultaneous but varying evaluation schema.
10. Iacobucci and Triantis (2007), ibid.
Bond-buyers are also traditionally older and might have been more leery about investing in a new technology such as the Internet during the 1990s. The choice of these companies to pay a higher rate of return to compensate for the greater risk would have defeated the purpose of the corporation issuing bonds in the first place, as what makes the issuing of bonds so attractive is that the interest rates
Corporations Law Initial Public Offerings (IPOs) are the first time a privately held company sells its stock to the public. When such corporation needs to raise additional capital, it can either take on debt or sell partial ownership. If the corporation chooses to sell ownership to the public, it engages in an IPO (Initial Public Offerings, 2011, p. 1). Although it is difficult to get on the ground floor of an IPO
Bond Review Compare and summarize a separate article on why companies or individuals invest in bonds. There are a variety of reasons as to why a corporation or an individual will purchase bonds. Some of the most notable that were previously discussed include: safety, steady returns and they are providing diversification to the portfolio. To determine the accuracy of these findings we will compare these ideas with those from a piece literature
United Technology Corporations in regard to its strategies, financial performance and general stock performance. The conglomerate's strategy and positioning is presented in regard to its various constituent firms. A conclusion is provided on the basis of the obtained financial outlook. Financial performance and strategy Capital markets considerations UTC's financial and investor ratios Price to Operating Profit (P/OP) Price to Book Value (P/BV) UTC's corporate strategy and positioning United Technologies Corporation (UTC) is an American multinational conglomerate
This creates the largest challenge for a global company like WalMart which has to ensure that it keeps up with changes that are happening in different states and countries. For example the rules for employees in Massachusetts are different from those in New York. This creates challenges for the organization in trying to keep up with compliance to legal standards. Cultural change around the world is also creating challenges for
Long-Term Financial Planning FedEx Corporation FedEx Corporation was established in 1971 and the company has four distinct business segments that include FedEx Express, FedEx Ground, FedEx Office and FedEx Freight. Over the years, the company has obtained 6-year of CAGR (compounded annual growth of 5%). However, the company is likely to obtain similar CAGR of 5.9% over the next 8 years based on current economic environment. (FedEx Corporation .2010. The WACC (weighted average