Abstract
The aim of this paper is, firstly, to explore the short- and long-term sources of financing available to companies, and secondly, to determine the sources of short- and long-term financing to be employed on the basis of lowest cost criteria and taking into account the importance of scientifically-based financial management. A company should consider the cost of all available sources along with their impact on its profitability and solvency, and decide on the optimal amount of short- and long-term sources of financing and their optimal composition from the cost-effective point of view. In determining which sources of short- and long-term financing to employ, it is important to take into consideration the cost of all sources available to companies and choose those most appropriate in terms of effective after-tax interest rate because this is what represents the real cost of financing. The result of the work will provide equations for calculating an effective interest rate for different short- and long-term financing sources available to companies.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Auernheimer, L. (2003). International financial markets: The challenge of globalization. Chicago: The Bush School.
Bessler, W., Drobetz, W., & Kazemieh, R. (2011). Factors affecting capital structure decisions, Capital structure and corporate financing decisions. New Jersy: Wiley.
Brealey, R., Myers, S., & Allen, F. (2011). Principles of corporate finance (10th ed.). New York: Mc Graw-Hill Irvin.
Brigham, E. F., & Gapenski, L. C. (1994). Financial management (7th ed.). Fort Worth: The Dryden Press.
Childs, P., Mauer, D., & Ott, S. (2005). Interactions of corporate financing and investment decisions: The effects of agency conflicts. Journal of Financial Economics, 76(3), 667–690.
Custodio, C., Ferreira, M., & Laureano, L. (2013). Why are US firms using more short-term debt. Journal of Financial Economics, 108(1), 182–212.
Dangl, T., & Zechner, J. (2016). Debt maturity and the dynamics of leverage, CFS WP No. 547.
Ericsson, J. (2000). Asset substitution, debt Pricing, optimal leverage and maturity. Finance, 21(2), 39–70.
Graham, J., Smart, S., & Megginson, W. (2010). Corporate finance linking theory to what companies do (3rd ed.). Mason: South-Western Cengage Learning.
Harford, J., & Maxwell, W. (2014). Refinancing risk and cash holdings. Journal of Finance, 69(3), 975–1012.
Harvey, C., Lins, K., & Roper, A. (2004). The effect of capital structure when expected agency costs are extreme. Journal of Financial Economics, 74, 3–30.
Jensen, M. C. (1986). The agency cost of free cash flow: Corporate finance and takeovers. American Economic Review, 76(2), 323–329.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm, mangerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.
Jiraporn, P., & Tong, S. (2007). Debt maturity structure, agency costs and firm value: Evidence from 1973–2004. Working Paper.
Kolb, R. W. (1987). Financial management. Glenview: Scott, Foresman and Company.
Kontuš, E. (2012). Sources of short-term financing. International Journal of Management Cases, 14(2), 178–197.
Maness, T. S., & Zietlow, J. T. (2005). Short-term financial management. South Western: Thomson.
Miltersen, K., & Torous, W. (2007). Risky corporate debt with finite maturity, Working paper.
Moschandreas, M. (2000). Business economics (2nd ed.). London: Thomson.
Myers, S. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175.
Park, K. S. (2015). Capital structure redux: Maturity, leverage and flexibility, Working paper, Copenhagen Business school.
Pinches, G. E. (1994). Financial management. New York: Harper Collins College Publishers.
Seitz, N., & Ellison, M. (1995). Capital budgeting and long-term financing decisions (2nd ed.). Orlando: Dryden Press.
Shim, J. K., & Siegel, J. G. (2007). Financial management (3rd ed.). New York: McGraw Hill.
Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52, 737–783.
Walker, E. W., & Petty, J. W. (1986). Financial management of the small firm. Englewood Cliffs: Prentice-Hall.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG
About this paper
Cite this paper
Kontuš, E. (2018). Financing Management of Companies. In: Dominici, G., Del Giudice, M., Lombardi, R. (eds) Governing Business Systems. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-66036-3_1
Download citation
DOI: https://doi.org/10.1007/978-3-319-66036-3_1
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-66034-9
Online ISBN: 978-3-319-66036-3
eBook Packages: Business and ManagementBusiness and Management (R0)