, investor taxes and risky debt. However, their analysis assumes zero recovery in default. We extend their framework to allow for … anticipated recovery in default, yet small. The "cost of debt" in the tax adjusted discount rate formula is the debt’s yield …

state and regulators are not necessarily independent. Among other things, we show that firms invest more, issue more debt …

their informational advantage in the future. We point out that the strategic use of debt by an uninformed party induces … that (renegotiable) debt is a credible commitment to end the long-term relationship if information is not revealed. We show … that the strategic advantage of debt increases with good durability and we briefly address the financing decision of a …

aggressive', in which case they accept negative-NPV projects. In the first case, the uniquely optimal security is debt. In the … second case, it is levered equity. Debt maximizes lenders’ payoffs from financing low-NPV projects, i.e., projects that have … that are relatively likely to break even are financed with debt, while less profitable projects are financed with equity …

time. This increased stringency has affected both capital structure and debt spreads. Firms that suffer most from this … conservatism issue less debt and have lower leverage. However, their debt spreads are lower compared to the spreads of firms that … have not suffered from this conservatism, which implies that the market partly undoes the impact of conservatism on debt …

taxation, flotation costs of securities, and default costs. They are financed with equity, insured deposits, and risky debt …

high target leverage or "debt capacity" through choosing low target leverage. Thereby, firms reduce a problem of …

, restrictions on an affiliate’s debt-to-assets ratio reduce this ratio on average by 1.9%, while restrictions on an affiliate … affiliate’s debt to assets ratio by 0.8%, which shows that rules targeting internal leverage have an indirect effect on the …