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We examine whether and how auditors incorporate rollover risk in assessing a client's risk. Rollover risk is the risk associated with long-term debt maturing in 1 year, which has to be refinanced or settled shortly. Debt has two counteracting effects on firms' riskiness: increased liquidity risk and increased monitoring. The finance literature suggests that rollover risk is an apparent risk factor because it results in high liquidity risk but only a weak (or limited) monitoring benefit. Consistent with that literature, we show that auditors increase audit fees, exhibit a higher likelihood of issuing a going-concern opinion, and terminate relations with their clients more frequently as rollover risk increases. Our study is the first in the audit research literature to document that auditors factor rollover risk in their pricing, going concern, and client portfolio decisions. [ABSTRACT FROM AUTHOR]

There is more than one way for a surviving spouse to take required minimum distributions (RMDs) from their decedent spouse's retirement account. It can be done following a rollover of the decedent's retirement plan assets or IRA to their own IRA. It can be done after treating the decedent's IRA as their own. It can also be done by affirmatively electing to delay taking RMDs as an inherited account. [ABSTRACT FROM AUTHOR]

We build a dynamic model where the economy is vulnerable to belief-driven slow-moving debt crises at intermediate debt levels, and rollover crises at both low and high debt levels. Vis-à-vis the threat of slow-moving crises, countercyclical deficits generally welfare-dominate debt reduction policies. In a recession, optimizing governments only deleverage if debt is close to the threshold below which belief-driven slow-moving crises can no longer occur. The welfare benefits from deleveraging instead dominate if governments are concerned with losing market access even at low debt levels. Long bond maturities may fully eliminate belief-driven rollover crises but not slow-moving ones. [ABSTRACT FROM AUTHOR]

In the past three decades, governments in emerging markets have accumulated large amounts of international reserves, especially those with fixed exchange rates. This article proposes a theory of reserve accumulation that can account for these facts. Using a model of endogenous sovereign default with nominal rigidities, we argue that the interaction between sovereign risk and aggregate demand amplification generates a macroeconomic-stabilization hedging role for international reserves. We show that issuing debt to purchase reserves during good times allows the government to stabilize aggregate demand when sovereign spreads rise and rolling over the debt becomes more expensive. We provide empirical evidence consistent with the model's predictions. [ABSTRACT FROM AUTHOR]

Private equity firms are becoming significant players in the mergers and acquisitions marketplace. Increasingly, buyers are interested in obtaining less than 100 percent of the target corporation and are also keen on using rollover equity to defer tax to the seller and provide additional financing for the buyer. Finally, buyers also wish to obtain a stepup in the basis of the assets of the target. A Type F reorganization involving a state law conversion of an S corporation into a limited liability company (LLC) can provide harmony between buyers and sellers in these transactions. This article will examine the technique and will offer practical guidance to practitioners. [ABSTRACT FROM AUTHOR]

This study investigates the maturity structure of listed non-financial Brazilian companies from 2010 to 2019 and reveals that these companies do not spread their debt maturities upon renewal, unlike the results observed by Choi et al. (2018) for US firms. Even after the rollover shock in 2015 where the Brazilian sovereign debt's investment were downgraded, these firms did not increase the maturity spread of their debt. In addition, the research evaluated corporate debt management by utilizing Brazil's downgrade as a "quasi-natural experiment" in the exogenous shock model. The results indicate that Brazilian companies may face considerable debt rollover risks due to the concentration of maturities in specific maturity ranges during future credit shocks. Proper control of financing structures is crucial to ensure that companies remain resilient and do not have to turn down profitable investments or high-quality assets during financial crises. This research has significant implications for corporate practice and the associated risks of financing profitable projects, particularly in countries with less efficient capital markets. [ABSTRACT FROM AUTHOR]

We study dividend payouts when banks face coordination-based rollover crises. Banks in the model can use dividends to both risk shift and signal their available liquidity to short-term lenders, thus, influencing the lenders' actions. In the unique equilibrium both channels induce banks to pay higher dividends than in the absence of a rollover crisis. In our model banks exert an informational externality on other banks via the inferences and actions of lenders. Optimal dividend regulation that corrects this externality and promote financial stability includes a binding cap on dividends. We also discuss testable implications of our theory. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online [ABSTRACT FROM AUTHOR]

This paper shows that there is more scope for a borrower to engage in a sustainable infinite debt rollover (a "Ponzi scheme") when interest/growth rates are stochastic. In this context, I prove that the relevant "r vs. g" comparison uses the yield rlong to an infinite‐maturity zero‐coupon bond. I show that rlong is lower than the risk‐neutral expectation of the short‐term yield when it is variable, and that rlong is close to the minimal realization of the short‐term yield when it is highly persistent. The paper applies these results to illustrative heterogeneous agent dynamic stochastic general equilibrium models to obtain similarly weakened sufficient conditions for the existence of public debt bubbles. [ABSTRACT FROM AUTHOR]

Consistent with the existence of a rollover risk channel, we document that an increase in short‐term debt proportional to the total debt increases the cost of long‐term debt. The effect of rollover risk is more pronounced for the firms that are vulnerable to unforeseen negative events. Moreover, we find that the marginal effect of short‐term debt on the yield spread is intensified during periods of market illiquidity. Finally, our results suggest that this positive effect on the yield spread due to increased rollover risk is partially offset by a negative effect due to the attenuation of underinvestment problems. [ABSTRACT FROM AUTHOR]

We model asset encumbrance by banks subject to rollover risk and study the consequences for fragility, funding costs, and prudential regulation. A bank's privately optimal encumbrance choice balances the benefit of expanding profitable, yet illiquid, investment funded by cheap long-term senior secured debt, against the cost of greater fragility from runs on unsecured debt. We derive testable implications about encumbrance ratios. The introduction of deposit insurance or wholesale funding guarantees induces excessive encumbrance and fragility. Limits on asset encumbrance or Pigovian taxes eliminate such risk-shifting incentives. Our results shed light on prudential policies currently being pursued in several jurisdictions. Received September 9, 2017; editorial decision July 28, 2018 by Editor Philip Strahan. [ABSTRACT FROM AUTHOR]

This study proposes the threshold level of steering effort to reduce rollover accidents. There is much research about the causes of rollover behavior during driving. The center of gravity height, tread length of road wheels, tire properties, and ESC is among the leading causes of rollover of vehicles. An enormous amount of research was done on those factors. First, the steering effort threshold value, which leads to loss of wheel grip, was tested. Second dynamic maneuver tests were done in a virtual environment with the help of CarMaker® vehicle dynamics software. By doing that, steering effort could be measured to understand how much effort is needed in those risky situations. [ABSTRACT FROM AUTHOR]

With the release of Revenue Procedure 2016-47 in April of 2016, clients now have a new way of avoiding the complications of a missed 60-day rollover period. Clients can now self-certify their eligibility for an extension if certain requirements are met, eliminating the need for IRS preapproval. Therefore, planners need to explain to clients the events that could trigger the self-certification process and perhaps more importantly, identify specific requirements that could arise under each option for self-certification. This paper examines private letter rulings regarding 60-day waivers to clarify how IRS thinking will apply to a client's specific situation. After studying the various circumstances under which waivers were granted (and perhaps more importantly, denied), a clear pattern begins to emerge. By applying these historical trends to a client's current situation, planners can help their clients identify situations in which they may receive a waiver for the 60-day rollover rule. [ABSTRACT FROM AUTHOR]

The economic effect triggered by changes in the bank rollover standard has always been the focus of public attention. The purpose of this study was to investigate the association between the rollover restriction and the mismatch between investment and financing of enterprises in China. Using a difference‐in‐differences approach based on a quasi‐natural experiment of the 2007 reform of bank loan rollover policy that now prohibits firms from borrowing new loans to repay old ones, we employed the data of listed Chinese firms from 2002 to 2013 and determined that the rollover restriction significantly alleviated the degree of maturity mismatch. In addition, corporate short‐term loans decreased significantly after the restriction—mainly in the form of credit debt—while the level of long‐term debt did not significantly change. We further observed that bank credit resources began to favor high‐quality enterprises under the new rules. In addition, we concluded that the improvement in the efficiency of enterprise investment was the main reason for the alleviation of the maturity mismatch. Enterprises' preference for short‐term loans further aggravated the degree of maturity mismatch. Finally, the rollover restriction reduced corporate default risk and stock price crash risk. [ABSTRACT FROM AUTHOR]

We quantify the role of financial leverage behind the sluggish post-crisis investment performance of European firms. We use a cross-country firm-bank matched database to identify separate roles for firm leverage, bank balance sheet weaknesses arising from sovereign risk, and aggregate demand conditions. We find that firms entering the crisis with higher debt levels reduce their investment more after the crisis. This negative effect is stronger for firms holding short-term debt in countries whose banks are weak due to sovereign stress, consistent with rollover risk being an important channel influencing investment. The negative effect of firm leverage on investment is also persistent for several years after the shock in the countries with sovereign stress. The corporate leverage channel can explain about 20% of the cumulative decline in aggregate private sector investment over the crisis period. [ABSTRACT FROM AUTHOR]

This research proposes a numerical methodology to assess the behavior of a car towing a generic caravan in crosswind conditions. Driving with crosswind can lead to dangerous situations. The vehicle can have stability issues and eventually crash. Different crosswind and vehicle velocities have been analysed using a car-caravan dynamic model with accurate aerodynamic loads. The forces generated by the action of the wind are calculated with CFD simulations and applied to the vehicle to perform dynamic simulations. Results show that also non-extreme crosswind condition could lead to dangerous situations. [ABSTRACT FROM AUTHOR]

Using a dataset on Chinese listed firms, we study the impact of short debt maturity on capital expenditures. In contrast to the empirical findings from most of the previous works that rely on the US firm-level datasets, our results show that firms invest less rather than invest more when they have relatively shorter debt maturity. We argue that in an economy where short-term bank loans are the major financing resource, such as that of China, firms with shorter debt maturity tend to suffer more from potential rollover risks and hence are more likely to reduce their near future capital expenditures. Such an overhang effect generated by short-term debt becomes stronger when firms present worse financial health, as rollover risks are likely to be more serious when firms' assets-in-place deteriorate. [ABSTRACT FROM AUTHOR]

This article shows that the inability to use monetary policy for macroeconomic stabilization leaves a government more vulnerable to a rollover crisis. We study a sovereign default model with self-fulfilling rollover crises, foreign currency debt, and nominal rigidities. When the government lacks monetary independence, lenders anticipate that the government would face a severe recession in the event of a liquidity crisis and are therefore more prone to run on government bonds. In a quantitative application to the Eurozone debt crisis, we find that the lack of monetary autonomy played a central role in making Spain vulnerable to a rollover crisis. Finally, we argue that a lender of last resort can go a long way toward reducing the costs of giving up monetary independence. [ABSTRACT FROM AUTHOR]

When releasing a new version of a durable product, a firm aims to attract new customers as well as persuade its existing customer base to upgrade. This is commonly achieved through a rollover strategy, which comprises the price of the new product as well as the decision to discontinue the sale of the existing product (solo rollover) or to sell the existing product at a discounted price (dual rollover). In this study, we argue that the timing of the new product release is an important—but commonly overlooked—third lever in the design of a successful rollover strategy. The release timing influences the consumers' perception of obsolescence, by which an existing product is considered obsolete merely by reference to a new product. This reinforces the upgrading behavior of existing customers, but it also necessitates deep discounts of the existing product to keep its sale viable in a dual rollover. We analyze the impact of the release timing on solo and dual rollovers in markets for digital goods (i.e., where production costs are negligible) that are composed of naive and sophisticated consumers. Under the assumption that both the old and the new product would offer a similar utility if there was no perceived obsolescence, we show that in both markets a firm selecting the release times from a continuous timeline can induce sufficiently large parts of its existing customer base to upgrade so that a solo rollover is optimal. We also characterize the resulting market segmentation, and we offer managerial as well as policy advice. [ABSTRACT FROM AUTHOR]

Planning for the small-business owner requires a financial planner to wear many hats. Financial planners perform a variety of tasks to ensure that the business runs smoothly and has the proper benefits in place, and to guarantee that the business continues after an owner's death. However, before planners get to help out with current and future operations of the small business, they may be called upon to help create the business in the first place. A unique method currently being used to create small businesses is using a qualified retirement plan rollover to start the new business. The "rollover as business start-up" strategy (commonly referred to as ROBS) poses some challenging financial planning issues. Some believe ROBS are misused rollovers destined to wreck retirement (and potentially an abusive tax practice) and others believe ROBS may be the fuel needed to help the client reach his or her dream of business ownership. Devil or angel; we will take a closer look. [ABSTRACT FROM AUTHOR]

For many years, the IRS had interpreted Internal Revenue Code Section 408(d)(3)(B) as providing that an IRA owner could perform more than one nontaxable rollover within a year, on an IRA-by-IRA basis. In other words, the one-year limitation was applied individually to each separate IRA, not in the aggregate. As a result of a Court decision the IRS has reversed this position. [ABSTRACT FROM AUTHOR]

Counseling clients on their IRA beneficiary designation options is not what it used to be. The recent U.S. Supreme Court case, Clark v. Rameker, should teach financial advisors a valuable lesson to remember when considering a client's IRA options. Advisors must know the client's estate planning goals and understand that a trust can be used as an IRA asset protection planning tool. Deeper IRA beneficiary designation counseling presents a great opportunity for financial advisors and attorneys to: 1) increase credibility with clients, 2) strengthen client relationships, 3) add value to practices geared toward comprehensive wealth management, and 4) strengthen relationships among planning professionals. [ABSTRACT FROM AUTHOR]

Semi-trailer articulated vehicles are mainly used for transportation of goods and industrial products. The vehicles are made of two or more vehicular units that are coupled by a mechanical device called, hitch point. The static and dynamic behavior of these vehicles differs from those of other vehicles, while accidents on these vehicles are fatal and disastrous. Therefore, there is need to know more about the static and dynamic characteristic of these vehicle, in order to ensure safety of lives and properties. This paper provides literature review on the aforementioned vehicle in order to have more insight on how to improve its stability. It was observed from the literatures review that, the higher the weight on this vehicle, the farther the distance of centre of gravity (CG) from the hitch point. This affects the safety margin against rollover stability of these vehicles. The fifth wheel lead, and the distance between the tractor, and the trailer CG were also found to play a vital role in influencing the stability of these vehicles. However, it was observed that, it would of great important for a tractor unit with one rear axle, to have the fifth wheel lead, to be as large as possible in order to control the vehicle instability. Therefore, due to the unusual behavior of these vehicles, more research works are needed in order to have more insight on the static and dynamic characteristic of these vehicles as to improve the safety of lives and properties. [ABSTRACT FROM AUTHOR]

Recent tax law changes have introduced and then expanded the opportunity for individuals to convert amounts in a traditional 401(k), 403(b), or 457(b) plan to a Roth account via an in-plan rollover. However, a rollover transaction may entail an upfront tax cost. This article describes the new Roth rollover rules and provides decision models to assist plan participants and financial advisors in deciding whether to engage in an in-plan rollover. [ABSTRACT FROM AUTHOR]

We investigate the trade-off between incentive provision and inefficient rollover freezes for a firm financed with short-term debt. First, debt maturity that is too short-term is inefficient, even with incentive provision. The optimal maturity is an interior solution that avoids excessive rollover risk while providing sufficient incentives for the manager to avoid risk-shifting when the firm is in good health. Second, allowing the manager to risk-shift during a freeze actually increases creditor confidence. Debt policy should not prevent the manager from holding what may appear to be otherwise low-mean strategies that have option value during a freeze. Third, a limited but not perfectly reliable form of emergency financing during a freeze--a "bailout"--may improve the terms of the trade-off and increase total ex ante value by instilling confidence in the creditor markets. Our conclusions highlight the endogenous interaction between risk from the asset and liability sides of the balance sheet. [ABSTRACT FROM AUTHOR]

The new in-plan Roth rollover rules add another layer of analysis for advisors to consider with clients or their beneficiaries who become eligible for plan payouts, either through a severance of employment or at retirement, disability, or death. Dual considerations should be discussed: whether Roth planning is appropriate for the client's situation, and whether a qualified plan or an IRA is the optimal vehicle for maintaining the client's assets. [ABSTRACT FROM AUTHOR]