News about zero-leverage firms

Thomas A. Geelen (EPFL and Swiss Finance Institute)

I develop a dynamic model of financing decisions and optimal debt maturity choice in which creditors face adverse selection and learn about the firm's quality from news. In equilibrium, shareholders may choose to postpone debt issuance to reduce adverse selection and improve the pricing of newly issued debt. Over time, the benefits of learning decrease and zero-leverage firms eventually decide to issue debt. Because shorter maturity debt is less sensitive to information, younger firms issue shorter maturity debt to alleviate adverse selection while mature firms issue longer maturity debt, leading to a life-cycle theory of debt maturity

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Year of publication:	December 21, 2016
Authors:	Geelen, Thomas A.
Publisher:	Geneva : Swiss Finance Institute
Subject:	debt maturity \| capital structure \| adverse selection \| zero leverage \| debt issuance \| Kapitalstruktur \| Capital structure \| Fremdkapital \| Debt financing \| Adverse Selektion \| Adverse selection \| Theorie \| Theory \| Fälligkeit \| Maturity \| Verbindlichkeiten \| Corporate debt \| Schuldenmanagement \| Debt management

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Extent:	1 Online-Ressource (circa 67 Seiten) Illustrationen
Series:	Research paper series / Swiss Finance Institute. - Geneva, ZDB-ID 2392286-2. - Vol. no 16, 78 Swiss Finance Institute Research Paper ; No. 16-78
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Other identifiers:	10.2139/ssrn.2894425 [DOI]
Classification:	G32 - Financing Policy; Capital and Ownership Structure ; D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011626255