Over the last two decades the level of non-standard employment in Australia has risen to one of the highest amongst OECD countries (Campbell 2004). While there are numerous forms of employment that come under the banner of ‘non-standard’, such as fixed term employment, temporary work and shift work, the recent increase is dominated by a substantial level of growth in the incidence and spread of casual employment, a specific form of non-standard employment. In essence, a casual employment contract entails an employee being paid one hours wage for one hour of work, with no other employment benefits, such as paid sick or holiday leave or notice of dismissal. The level of casual employment has increased from 15.8% of the labour force in 1984 to 27.3% in 2002 (Pocock, Buchanan and Campbell 2004:17). While it is problematic to compare countries with different labour frameworks, this does represent one of the highest rates of non-standard employment in the West (Campbell 2004:93).
This thesis will focus solely on comparisons between casual employment and permanent employment, and will not take other forms of non-standard employment into consideration. It should, however, be noted that the increasing incidence in the forms of non-standard employment has occurred for a variety of reasons, and so the classification of non-standard employment should not be treated as a homogenous group (Murtough and Whaite 2000). The findings of this study relate solely to casual employment, and should not be related directly to other forms of non-standard employment.
During the past 30 years, a major obesity problem has developed in the United States. In 2005, it was estimated that more than 65% of American adults were overweight, with almost 35% being obese. Not only has there been an epidemic of obesity among adults, but equally as important is the obesity in our children. As you can see on page 1 in the following materials, from 1963 until 2000 there was almost a quadrupling of children in the U.S. who are overweight. this represents the top five percentile of obese children. If you consider the top fifteenth percentile (and those are children who will very likely become obese as adults), the numbers double. In other words, in the year 2000 at least 30% of children 6 to 19 years of age were obese or bordering on being obese, and in the last 6 years that number has continued to increase. It has been reported in some areas of South Texas that the overweight and obesity among children is now approaching 42%.
One of the consequences of debt financing is its influence on the firm’s investment policy. As it is known from Myers (1977), the presence of debt in the company’s books leads to underinvestment, i.e. a situation in which some positive NPV projects are foregone. Although the impact of the agency costs of debt on the firm’s investment policy has been widely discussed in the literature in qualitative terms, relatively little has been done to analyze the magnitude of these costs. Moreover, the existing contributions yield differing predictions concerning the influence of the renegotiability of debt on the investment policy (cf. Mella-Barral and Perraudin, 1997, and Mauer and Ott, 1999). This paper uses the contingent claims approach to examine the firm’s optimal investment and liquidation policy in the presence of debt financing and the equityholders’ option to default and renegotiate the original debt contract.
The main objective of the paper is to investigate the impact of the renegotiation option, the distribution of bargaining power, and indirect bankruptcy costs on the optimal investment and liquidation policy of the firm. In particular, we are interested in the impact of those debt characteristics on the magnitude of underinvestment problem. Furthermore, the impact of a growth opportunity on the optimal bankruptcy and renegotiation timing is analyzed. In this way it can be investigated whether firms operating in sectors with significant growth opportunities are less likely to file for debt restructuring than their counterparts in more mature industries.
