Johnson, T.C.; Chebonenko, T.; Cunha, I.; D'Almeida, F.; … - In: Finance Research Letters 8 (2011) 3, pp. 132-145
This note clarifies conditions under which endogenous choice of debt induces a negative relation between leverage or default risk and expected stock returns. In the context of the model of George and Hwang [2009. Journal of Financial Economics 96, 56-79], we correct the contention that variation...