Optimal capital structure: A multi-period programming model for use in financial planning

This paper describes a multi-period, chance constrained mathematical programming model to compute for each period, the firm's optimal debt to equity ratio and the optimal maturity distribution of its debt. The model assumes that the firm's objective is to maximize total value of the firm, and that the firm operates in a world of uncertainty, with corporate income taxes and bankruptcy costs. Finally, the actual coupon rate paid by the firm which is commensurate to the risk of default is endogenously determined by the model.     

Reviews

“LOCAL EMPLOYMENT PLANS” Norwich City Council, 1987: Taking Norwich into the 1990s. Norwich, free.

Bristol City Council, 1987: Bristol: An Employment Plan. Bristol, £1.00.

Reading Borough Council, 1987: Creating Opportunities: A Programme for Jobs in Reading. Reading, no price stated.

Cleveland County Council, 1987: Unemployment Strategy. Middlesbrough, free.

Sheffield City Council: Employment and Economic Development Department 1987: Sheffield Employment Matters. Issue 1. Sheffield, £10 for 3 issues.

Lancashire Enterprises Ltd, 1987: Annual Report 1986-87. Preston, free.

“ETHNIC MINORITIES AND YOUTH TRAINING” Malcolm Cross and Douglas Smith (editors) 1987: Black Youth Futures: Ethnic Minorities and the Youth Training Scheme, National Youth Bureau. No price stated.

“HOMEWORKING” Allen, S. and Wolkowitz, C., 1987: Homeworking: Myths and Realities. London: Macmillan, £25.00 cloth, £7.95 paper.

“STRATEGY FOR RETAILING” Montgomery, J., 1987: Trade Winds — the changing face of retailing and retail employment in the South East — an alternative strategy. South East Economic Development Strategy, Daneshill House, Danesgate Street, Stevenage, Herts. No price stated.     

The changing spatial economy of cities: An exploratory analysis of Cape Town

The spatial economy of South African cities is generally believed to be experiencing selective deconcentration, which may exacerbate social inequality because of the physical disconnection between jobs and population. This paper assesses whether the locational pattern of economic activity across Cape Town is following this trajectory, using data from the Regional Service Council levies between 2001 and 2005. One of the main findings is that the city centre and areas close to the centre have maintained their economic dominance, therefore Cape Town remains a monocentric city. Yet the pattern of recent growth is more dispersed than the prior distribution because suburban nodes have gained a disproportionate share of new activity. In addition, the pattern of recent growth is skewed towards the high-income suburbs and away from the Cape Flats where most of the city's poor live. This uneven growth trajectory may be a source of concern for economic, social and environmental reasons.     

Initial relationship development in new business ventures

This paper seeks to investigate some of the issues faced by an existing company when developing the initial customer relationships for a new venture. All companies face the challenge of new-relationship development in order to achieve growth and to replace relationships which have been lost or are in decline. But the challenge of developing the first customer relationships of a new venture is likely to be particularly acute because the new venture's marketing function and its offering to customers are likely to be undefined and undeveloped. This paper is based on a case study of initial customer relationship development in a new venture of an established business. The paper analyses the issues that the company faced in developing these initial relationships and the approaches to relationship development that it took. The case analysis leads to the conclusion that the development of initial relationships can be facilitated by an ‘open marketing function’ involving a number of functional areas both in the supplier and in the initial customers. The paper draws managerial implications from the case analysis for the task of marketing in this situation.     

Devaluation of fixed exchange rates: optimal strategy in the presence of speculation

Summary. This paper analyzes devaluations in a fixed exchange rate system by endogenizing both the speculation and devaluation decisions. It is shown that deterministic devaluation rules are generally sub-optimal for the central bank. In order to deter speculation the central bank introduces uncertainty into the timing of devaluation. The nature this mixed strategy is derived, as is the optimal strategy for speculators. The analysis allows an explanation of successful devaluations that are not precipitated by a speculative attacks, even under perfect capital mobility. Received: May 17, 1999; revised version: June 2, 1999