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Cash Distributions of Inflationary Gains
Author(s) -
PETRI E.,
SHAWKY H.
Publication year - 1983
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.1983.tb00239.x
Subject(s) - monetary economics , economics , equity (law) , debt , inflation (cosmology) , debt to equity ratio , cash , macroeconomics , population , physics , demography , sociology , theoretical physics , political science , law , nonprobability sampling
When a firm maintains its debt/equity ratio, changes in expectations of inflation lead to windfall gains through the ‘Fisher Effect’. Contrary to other studies, it is demonstrated here that the gain can be distributed to equity owners without impairing the firm's capacity to retire its debt.