divert cash flows for their own benefit. We employ a repeated games framework which allows us to model outside equity as well … as inside equity and debt. We call our framework the two-stage model of firm growth. A key finding is that outside equity … promotes ex post efficiently (second stage growth) at the expense of ex ante efficiently (first stage growth) which debt work …

, trading off the tax advantages of debt against the risk of costly default. The costs of bankruptcy are endogenously determined … constrained inefficient. In particular there is too little debt and too little default. …

We consider the long memory and leverage properties of a model for the conditional variance of an observable stationary … of Engle (1990), and to a version of the quadratic ARCH model of Sentana (1995), these authors having discussed leverage … memory processes. We also establish a leverage property and conditions for finiteness of third and higher moments. …

The Great Recession has indicated that firms' leverage and access to finance are important for hiring and firing … cash was accumulated by firms. If firms hold liquid assets they may thus protect their search capital, defined as the cost … of attracting and hiring workers. The paper explores the trade-off between size and precautionary cash holdings in both …