Optimal Capital Structure and Debt Capacity Analysis in Capital-Intensive Firms:The Taiwan HSR and TFT-LCD Panel Maker Cases
| Autor: | Yao-Sheng Hsieh, 謝耀陞 |
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| Rok vydání: | 2009 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 97 Transportation infrastructure has been one of the major issues for the society and economy developments for developing countries. To discover the financial incentive for the private sectors, the major issues for the BOT investment project is to evaluate properly. Furthermore, the private sectors must face the problem that the project could not offer the equivalent collateral for financial leverage. The fund providers look primarily the cash flow from the project as the source of funds to repay the loans and provide the return on their equity invested in the project. As the risks inherited in the project are tremendous, the conflicts between private sectors (investors) and financial institutions (lenders) do exist. A BOT project financing requires careful financial engineering to allocate the project risks and rewards among the involved parties to reach a simultaneously acceptable condition. The appropriate BOT project capital structure depends not only on the expected profitability, operating and financial risks of the project, but also on the level of the default risk. The model by McDonald''s (1999) is modified to examine the optimal financial leverage in the capital-intensive BOT investment project. Under project financing arrangement, with the objective of maximizing net present value of an equity investment, the proposed model could be applied to enhance the quality of financial plan for a BOT project. Finally, the Taiwan High Speed Railway project is provided as an example to demonstrate our approach, this project faces the threat of bankruptcy with a heavy burden of tremendous interest payments on highly leverage. Our results find out the chief defects of the project financing planning of Taiwan HSR project are ignoring the tremendous operating risk to neglect the equity investor''s required return on equity of the BOT project and adopt the unsuitable interest rate because the sponsors of this project relied on Taiwan government subsidiary too much. In this study, we also have applied this optimal capital structure evaluation approach in TFT-LCD panel maker case because the capital intensive characteristic is manifest in TFT-LCD industry. Owing to there is no rigid regulation in credit rating in Taiwan capital market. Upon our research result, we also worried the TFT-LCD panel maker bears too much financial risk. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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