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Book synopsis

To understand the appropriate capital structure for healthcare firms, a two-stage approach to predict the use of long-term debt can provide valuable insight into the determinants of leverage. Business risk (BR) in tandem with other determinants of capital structure does improve predictive power in a two-part econometric model. However, because of the frequency of not-for-profit(NFP) entities in the Healthcare Sector, an approximation of BR was developed and used in a sample of investor-owned and NFP firms. Within the IO sample, a combined model (BR and traditional determinants)that uses the BR approximation explains over 33% of the variance in long-term debt usage among healthcare providers and service firms. The same BR proxy and model explains 7.2% of the variance among NFP hospitals. The substantially different results among the IO and NFP firms suggest that NFP firms are not adequately accounting for risk when determining their long-term debt usage, NFP healthcare facilities have a different response to risk relative to their IO counterparts, or the benefits of long-term debt financing that accrue to NFP firms are greater than the benefits that accrue to IO firms.

Book details

Book category Books in English Economics, finance, business & management Economics

• Full title: Predicting Long-Term Debt in the Healthcare Sector
• Author: Jason Turner
• Language: English
• Binding: Paperback
• Number of pages: 184
• EAN: 9783639708707
• ISBN: 3639708709
• ID: 07119727
• Publisher: Scholars' Press
• Weight: 277 g
• Dimensions: 229 × 152 × 11 mm
• Date of publishing: 16. February 2014

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