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- Title
FINANCIAL MANAGEMENT INDICATORS TO AID DECISION MAKING (STATISTICS).
- Abstract
The article discusses the manipulation of company earnings through debt equity swaps and defeasances. In a debt-equity swap, an investment banker purchases a company's bonds in the open market, exchanges those bonds for a new issue of the company's common stock, and then sells the stock to investors. A swap thus combines a new equity issue with a retirement of debt. In an insubtance defeasance, a company buys government securities with cash payouts identical in amount and timing to those promised by some of its own outstanding bonds. As in the case of debt-equity swaps, the accounting income from a defeasance does not correspond to an increase in cash flow.
- Subjects
CORPORATE finance; CORPORATE debt; SWAPS (Finance); SECURITIES; ACCOUNTS payable; DEFEASANCE
- Publication
Journal of Financial Management & Analysis, 2005, Vol 18, Issue 1, p1
- ISSN
0970-4205
- Publication type
Article