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Credit Risk and Dynamic Capital Structure Choice
Dangl, Thomas; Zechner, Josef - C.E.P.R. Discussion Papers - 2003
This Paper analyses the effect of dynamic capital structure adjustments on credit risk. Firms may optimally adjust their leverage in response to stochastic changes in firm value. It is shown that capital structure dynamics lower optimal initial leverage ratios but increase both fair credit...
Persistent link: https://www.econbiz.de/10005123682
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Preserving "Debt Capacity" or "Equity Capacity": A Dynamic Theory of Security Design under Asymmetric Information
Inderst, Roman; Vladimirov, Vladimir - C.E.P.R. Discussion Papers - 2014
theory also entails implications for start-up and venture capital financing. …
Persistent link: https://www.econbiz.de/10011084368
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Creditor Rights and Debt Allocation within Multinationals
Akbel, Basak; Schnitzer, Monika - C.E.P.R. Discussion Papers - 2010
We analyze the optimal debt structure of multinational corporations choosing between centralized or decentralized borrowing. We identify how this choice is affected by creditor rights and bankruptcy costs, taking into account managerial incentives and coinsurance considerations. We find that...
Persistent link: https://www.econbiz.de/10008466341
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Disagreement and Flexibility: A Theory of Optimal Security Issuance and Capital Structure
Boot, Arnoud W A; Thakor, Anjan - C.E.P.R. Discussion Papers - 2003
strongest implication of this theory of capital structure evolution is that optimal capital structure is essentially dynamic … prices are low. The theory explains many stylized facts that fly in the face of existing capital structure theories and also … generates new testable predictions. Moreover, the theory can rationalize the use of debt in the absence of taxes, agency costs …
Persistent link: https://www.econbiz.de/10005666532
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Limits of Limits of Arbitrage: Theory and Evidence
Hombert, Johan; Thesmar, David - C.E.P.R. Discussion Papers - 2009
We present a model where arbitrageurs operate on an asset market that can be hit by information shocks. Before entering the market, arbitrageurs are allowed to optimize their capital structure, in order to take advantage of potential underpricing. We find that, at equilibrium, some arbitrageurs...
Persistent link: https://www.econbiz.de/10005666728
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Liquidity Risk, Leverage and Long-Run IPO Returns
Eckbo, B Espen; Norli, Øyvind - C.E.P.R. Discussion Papers - 2005
We examine the risk-return characteristics of a rolling portfolio investment strategy where more than six thousand Nasdaq initial public offering (IPO) stocks are bought and held for up to five years. The average long-run portfolio return is low, but IPO stocks appear as ‘longshots’, as...
Persistent link: https://www.econbiz.de/10005124287
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A New Test of Capital Structure
Mayer, Colin; Sussman, Oren - C.E.P.R. Discussion Papers - 2004
This Paper reports a new test of capital structure theories. It uses a filtering technique to identify large investment spikes. We find that the spikes are predominantly financed with debt by large firms and by new equity by small loss-making firms. In the process, firms move significantly away...
Persistent link: https://www.econbiz.de/10005067393
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Who is Afraid of Political Risk? Multinational Firms and their Choice of Capital Structure
Kesternich, Iris; Schnitzer, Monika - C.E.P.R. Discussion Papers - 2007
This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such...
Persistent link: https://www.econbiz.de/10005067659
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Capital Structure and Regulation: Do Ownership and Regulatory Independence Matter?
Bortolotti, Bernardo; Cambini, Carlo; Rondi, Laura; … - C.E.P.R. Discussion Papers - 2008
, and it also has a positive and significant effect on their market values. Our results are consistent with the theory that …
Persistent link: https://www.econbiz.de/10005497873
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Moral Hazard and Capital Structure Dynamics
Dewatripont, Mathias; Legros, Patrick; Matthews, Steven A - C.E.P.R. Discussion Papers - 2002
We base a contracting theory for a start-up firm on an agency model with observable but nonverifiable effort, and …
Persistent link: https://www.econbiz.de/10005498043