Boot, Arnoud W.A.; Thakor, Anjan V. - Tinbergen Instituut - 2003
In this paper we introduce flexibility as an economic concept and apply it to the firm’ssecurity issuance decision and …’s optimal security-issuance choice trades off the flexibilitybenefit of equity against the now-familiar debt tax shield, and the … firm’s capital structure isthe consequence of a sequence of past security-issuance choices. The strongest implication …